Iraq’s minister of oil, Jabbar Al Luebi, said it is too early for ministers from OPEC and participating non-OPEC countries to consider whether or not to extend production cuts that are in place to shore up oil prices beyond the current deadline of March next year.
Speaking at the Gulf Intelligence Energy Markets Forum in Fujairah on Tuesday, Al Luebi said: “It is premature to come to a decision or a conclusion seven months before March.”
Although he said that talks were ongoing “within back corridors” among oil ministers on what course of action to take once the current agreed period of production cuts expires, there is no pressure to take a decision on the next move so early.
“Some think the cuts should be extended beyond March – by another three, four or six months, or maybe by the end of 2018. Some, like Ecuador and other countries – even Iraq, really – think that there should be another cut of one percent or so, but as I said, it’s very early to speak this year,” Al Luebi told the forum.
“We are watching developments in the oil market, in the price and the stability. That will be the dynamo that will affect the decision,” he added.
Al Luebi also stressed his country’s commitment to the Organization of the Petroleum Exporting Countries (OPEC) and said that although there had been a report alleging that Iraq had not upheld its commitment to production cuts, this was “totally incorrect”.
“We are in full compliance. Actually, we exceeded our share of 210,000 barrels per day of cuts and we are in the region of 270,000 barrels per day,” he said, stating that its current oil production stands at about 4.325 million barrels of oil per day.
Iraq is the fourth-biggest oil producer in the world, behind Russia, Saudi Arabia and the United States of America.
It is part of a group of 14 countries OPEC and non-OPEC countries which agreed in November 2016 to production cuts, in a bid to shore up the price of oil. An extension to the original programme of cuts was made in May this year.
The countries agreed to cut daily production by 1.8 million barrels, which has led to a recovery in prices of about 20 percent since the deal was first announced. Compliance with the cuts is said to be running at about 70 percent among OPEC members.
The International Energy Agency has predicted that demand for oil is likely to increase by about 1.8 million barrels per day next year. However, production by countries that are not subject to the agreement – including the United States – is forecasted to grow by around the same amount.
Speaking at the Gulf Intelligence Forum, Robin Mills, the managing director of energy consultancy firm Qamar Energy said that although he was initially sceptical about the deal, it has served its purpose.
“Now I think OPEC is in the deal... it’s then pretty difficult to get out of it without prices crashing and having another year or two of low prices and adjustment. The cuts so far, they are not that deep – not too deep to give up a lot of market share but enough to improve prices.”
© Zawya 2017