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Iraq expects OPEC+ will allow it to increase its oil exports beginning next year, Reuters reported today, citing the Iraqi state new agency INA, which was quoting the country’s oil minister without any further details.
Earlier this month, there was another report from INA that said Iraq was seeking an exemption from the OPEC production cuts. Oil minister Ihsan Abdul Jabbar denied the report soon after.Iraq has struggled to reduce its production to the quota allocated it by OPEC+ to rebalance oil markets. Indeed, for two of the five months since the start of the cuts, it has overproduced considerably.
This prompted OPEC leader Saudi Arabia to take a sterner stance: the Kingdom threatened Iraq and fellow laggard Nigeria with another open-tap offensive if they did not fall in line. According to the latest production information, Iraq did. In August, OPEC’s number-two pumped less than its quota as it compensated for the overproduction in the previous three months. According to OPEC’s latest Monthly Oil Market Report, Iraq’s August production was down by 100,000 bpd on July, to 3.652 million bpd, based on data from secondary sources.
However, oil revenues are vital for the struggling Iraqi economy, which still has a long way to go before it recovers from the war against Islamic State. This has made Iraq reluctant to join the latest production-cutting drive. So, even if the country is officially towing the party line, it could certainly use a breather. Unfortunately, it is unlikely to get one, especially now that Libya is resuming production at several fields, eyeing a production boost of more than 160,000 bpd by the end of this month.
In fact, amid the deteriorating outlook on oil demand, OPEC+ might consider keeping production cuts at the current level of 7.7 million bpd, instead of relaxing these by another 2 million bpd from January next year.