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Oil prices rose sharply toward $50 a barrel Monday as investors anticipated OPEC will announce a large production cut at its meeting this week.

Light, sweet crude for January delivery was up $3.24 to $49.52 a barrel in electronic trading on the New York Mercantile Exchange by mid-afternoon in Europe. The contract briefly reached $50.05 before falling back. On Friday, it fell $1.70 to settle at $46.28.

In London, January Brent crude gained $3.40 to $49.81 on the ICE Futures exchange.

The Organization of Petroleum Exporting Countries, which accounts for 40 percent of global supply, has signaled it plans to announce a substantial reduction of output quotas at its meeting Wednesday in Algeria.

"The extent of such cuts is still unclear and this uncertainty has been a source of continuing volatility in futures markets," said a report by analysts at KBC Market Services in Great Britain.

Kuwaiti oil minister Mohammed al-Eleim said Monday that OPEC was "undoubtedly inclined" to cut production. But he added that any decision would balance the need for a cut with its impact on the ailing world economy and producer nations' need for revenue to fund development projects.

Iranian Oil Minister Gholam Hossein Nozari was quoted Sunday on his ministry's Web site saying that Iran would push for a production cut of 1.5 to 2 million barrels per day.

Iran called on OPEC Saturday to cut production by a further 1 million to 1.5 million barrels per day when it meets in Cairo later this month, state television's Web site reported Saturday.

Iran's OPEC governor, Mohammad Ali Khatibi, said the cartel needs to act to slash output because demand for oil has declined due to the global financial meltdown.

OPEC, which produces about 40 percent of the world's crude oil, decided to cut production by 1.5 million barrels a day last month in response to a dramatic fall in oil prices from a record $147 in July to below $70 last month.

Despite the cut, oil prices have continued to decline. Light, sweet crude for December delivery fell $1.20 to settle at $57.04 a barrel on the New York Mercantile Exchange Friday.

Diving prices have forced OPEC to plan an extraordinary meeting in Cairo, scheduled for Nov. 29, to discuss the plunge.

"It would be better that, at the urgent meeting in Cairo, it (OPEC) decides to slash production by a further 1 to 1.5 million barrels per day in order to create a relative balance between supply and demand," Khatibi said.

Iran is afraid of the consequences of falling oil prices on its ailing economy. About 80 percent of Iran's public revenues come from oil exports and Iran's oil industry needs foreign investment to keep up production and export.

Khatibi said the continuing decline in oil prices means there is oversupply.

"The continuing fall in prices and increase in oil reserves by big industrial states shows there is oversupply. ... OPEC members have to remain committed to their quota obligations otherwise prices will keep diving," he added.

Iran, as OPEC's second largest oil exporter, has traditionally opposed any crude output increase by members, arguing that it would cause a fall in prices. It has also urged fellow OPEC members to respect their output quota to avoid a worsening of the oversupply.

Iran produces about 4 million barrels of oil per day. The country's recoverable oil reserves are estimated at 137 billion barrels -- or 12 percent -- of the world's overall reserves.

Iran also has the world's second largest natural gas reserves, estimated at 28 trillion cubic meters.