OPEC’s second-largest producer, Iraq, is promising additional cuts of around 400,000 barrels per day (bpd) this month in order to compensate for the lack of compliance with the OPEC+ agreement in the previous months, Reuters reported on Thursday, citing a statement from the Iraqi oil ministry.
Iraq, which has been the least compliant member of the OPEC+ production cut pact since it was first launched in January 2017, has been promising for months that it would reduce its oil production and fall in line with its quota—something it hasn’t done since 2017.
When OPEC+ extended the record production cuts of 9.7 million bpd by one month through the end of July, the coalition agreed that all countries in the pact should comply 100 percent with their quotas, and those who have not, should be compensating for lack of compliance by overachieving in the cuts in July, August, and September.
Iraq promised in June it was committed “to the voluntary oil production adjustments of June and July 2020, as well as the voluntary adjustments for the period following the end of July, despite the economic and financial challenges.”
Iraq is said to have recently slashed its crude oil exports, aiming for better compliance with the OPEC+ pact, but it appears it did not make material progress at least through July, according to the latest surveys about OPEC’s crude oil production.
According to the monthly Reuters survey published last Friday, the laggards in compliance in all previous months and all previous deals – Iraq and Nigeria – didn’t make much progress on moving toward higher compliance in July. As per the Reuters survey, OPEC’s production averaged 23.32 million bpd in July, up by 970,000 bpd compared to June, after Saudi Arabia, the United Arab Emirates (UAE), and Kuwait ended their collective voluntary one-month additional cuts after June.
The Bloomberg survey also found that Iraq and Nigeria failed to cut their production to the required ceiling last month, not to mention cutting beyond the target to compensate for previous lack of compliance.
By Tsvetana Paraskova for Oilprice.com
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