How strong is Iraq’s 1% more cut proposal for OPEC?
Baku, Azerbaijan, Sept.21
By Leman Zeynalova – Trend:
There is little chance of additional cuts being agreed in OPEC and Iraq has not yet complied with the cuts they promised at the deal in November 2016, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.
“Iraq’s cut compliance over the last 3 months has averaged just 30 percent. So Iraq is not in a strong position to suggest extending the cuts or increasing the cuts until they comply themselves,” he added.
Given Iraq has not yet complied with its official OPEC/non-OPEC target, there is no much strength in this statement, Christopher Haines, head of oil and gas at BMI Research, (a Fitch Group company) told Trend.
“Iraq agreed to output of 4.351 million barrels per day (b/d), yet according to OPEC secondary sources, production from January to August averaged 4.441 million b/d,” said Haines.
He pointed out that better compliance by Iraq would accelerate the move towards market rebalancing, though won’t substantially change the outlook for 2018, where an extension of the cut agreement will likely be needed.
Earlier, Iraqi oil minister Jabar al-Luaibi said that Iraq and some other oil producing countries believe that it is necessary to reduce the crude output be 1 percent more.
Iraq has undertaken the second largest cut in oil output after Saudi Arabia among the participants of the OPEC deal signed last year in Vienna.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
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