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Iran, Iraq may cause tension among OPEC supply cutters

Oil&Gas Materials 11 October 2017 12:15 (UTC +04:00)

Baku, Azerbaijan, Oct.11

By Leman Zeynalova – Trend:

Increased oil export from Iran and Iraq may lead to tension among supply cutters participating in OPEC deal on reducing crude output, Spencer Welch, director of the oil markets and downstream team in the London-based IHS Markit told Trend.

Earlier, ship-tracking data compiled by Bloomberg showed that Iraq and Iran boosted crude exports in September, taking advantage of a slower pace of shipments from Saudi Arabia to win buyers in key markets like China and the US.

Welch noted that if Iran has really increased its oil exports, this is not a major issue, because they have not yet breached their production limit set in November 2016.

“As for Iraq, this could be more of an issue, because Iraq’s compliance with their promised cuts has already been the worst of the OPEC countries, averaging only 33 percent of promised cuts in the last three months. If this does not improve, or declines further, it will create tension among the supply cutters,” the expert believes.

Iraq shipped 3.98 million barrels of crude a day, the highest since December, while Iran’s exports rose to 2.28 million barrels a day, the most since February. Saudi Arabia’s exports were 6.68 million barrels a day, the second-lowest for this year, the data show.

Saudi Arabia has undertaken the largest cut in oil output (486,000 barrels per day) among the participants of the OPEC deal signed last year in Vienna.

On May 25, 2017, 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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Follow the author on Twitter: @Lyaman_Zeyn

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