OPEC In Tatters As Iraq Looks To Break Production Cut

Published at 09:23AM - 10/10/16

Despite the Organisation of Petroleum Exporting Countries’ (OPEC) recent agreement on an oil output cut to control the supply glut, Iraq could be raising its oil production for the rest of the year and in 2017.

This adds another stumbling block for OPEC to successfully implement any oil production cut at its next meeting in the end of November.

“[The Iraqi oil minister] has affirmed the need to proceed forth with increasing oil and gas production through enhancing the national effort and those of the licensed companies for the remainder of 2016 and also for 2017,” a statement by Iraq’s oil ministry said.

Iraq Goes Against OPEC Oil Output Cut

The minister added that foreign companies’ oil output targets “should be reached within the assigned periods”.

OPEC had agreed at a recent meeting in Algiers that it would cut production until its next meeting to a range of between 32.5 million barrels per day (bpd) and 33 million bpd, from its current production total of 33.6 million bpd.

Iraq Oil Minister Jabbar-al-Luaibi
Iraqi Oil Minister Jabbar-al-Luaibi

However, the minster urged oil and gas producers this weekend to continue increasing their output, without mentioning OPEC’s agreement to cut production by 1%.

This has led crude oil prices to fall further today, on doubts that OPEC members will effectively implement a production cut.

Russia Wants Agreement to Include Non-Members

Iraq is currently OPEC’s second-largest oil producer, with a current output of nearly 4.5 million bpd and plans to raise this to 6 million bpd by 2020.

As well as the country’s recent decision to raise output, there has been some controversy surrounding OPEC and Iraq, especially due to discrepancies between the country’s production figures and those published by the Organisation.

As well as this, the Russian Energy minister Alexander Novak said he expects OPEC to also get non-members to cut output.

“We are waiting for the proposals which OPEC will elaborate internally to meet target levels and with which they will come out and approach non-OPEC nations,” he said on the Russian Energy Ministry’s website.