Baku, Azerbaijan, Oct.24
By Leman Zeynalova – Trend:
Iraq's demand to be exempted from OPEC’s output cut deal throws a very large spanner in the works for the deal, Tom Pugh, the economist at British economic research and consulting company Capital Economics, told Trend Oct.24.
Earlier, Iraq's Oil Minister Jabar Ali al-Luaibi said his country should be exempted from output restrictions as it was fighting a war with “Islamic State” (IS, aka ISIS, ISIL or Daesh) terrorist group.
"We are fighting a vicious war against the IS," Luaibi said in the briefing for reporters, adding that Iraq should get the same exemption as Nigeria and Libya, Reuters reported.
Luaibi said Iraq would make its case at OPEC "in a pleasant environment" to avoid tension.
Pugh noted that it was already looking like other OPEC members would have to cut their output by much more than the original 0.5 million barrels per day envisioned to accommodate the increases from Nigeria, Libya and Iran.
“Adding Iraq to this will mean the remaining members will have to cut by even more,” he said.
Pugh noted that Iraq’s demand can also push other countries to demand exemption from the output cut.
“Given that Iraq is claiming it needs the funds to fight an insurgency, Saudi Arabia could also claim it needs the funds to fights in Yemen and Venezuela could claim it needs funds to stave off the collapse of its entire economy,” he said.
In September, OPEC producers agreed during the informal meeting in Algiers to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC in November.
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