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Iraq To Support Oil Output Freeze At Algiers OPEC Meeting

Oil Rig

Iraqi Prime Minister Haider al-Abadi announced on Tuesday that the country would support a freeze in oil production during the next meeting of the Organization of Petroleum Exporting Countries (OPEC) in September.

“We are with freezing production at the OPEC meeting," he told reporters at a news conference in Baghdad.

The 12 OPEC members will meet informally in Algiers at the sidelines of the International Energy Forum (IEF).

The meeting will be newly minted Oil Minister Jabar Ali al-Luaibi’s first IEF event representing Iraq.

Iraq is the second largest oil producer in OPEC after Saudi Arabia, the de facto leader of the trade cartel.

Al-Luaibi called on international firms operating in Iraq to ramp up production in order to “boost national revenue”, according to an email obtained by Bloomberg last week.

Any ramp-up in production before the meeting would give Iraq leverage to freeze output at a higher production level during the OPEC summit. The nation’s oil production has been slowly declining since the beginning of this year.

(Click to enlarge)

Iraq’s production rate peaked at 4.51 million barrels per day in January 2016 - a month before barrel prices crashed to $26.21. Last month, Iraqi fields generated 4.36 million barrels a day.

The Iraqi government and the Kurdistan Regional Government (KRG) have been embroiled in an oil war against each other and against the Islamic State. With the latest victories being around the town of Qayarrah, where ISIS has flooded the streets with crude oil in an attempt to slow down Iraqi troops. Related: Why Wall Street Is Throwing Billions At The Permian

Qayyara’s oil fields have already been captured late last week, and Iraqi forces are now trying to complete an offensive to recapture nearby Mosul – the largest city still under ISIS control – in the coming weeks.

Baghdad and the KRG have been at odds over the terms of oil revenue-sharing deal that would allow the unilateral export of oil from Iraq. Currently, Kurdistan exports approximately 500,000 barrels per day of oil via Turkey, to Baghdad’s dismay.

While Iraq may have decided to freeze its oil output for now, it will no doubt continue to pursue its ambitious target of 6 million barrels per day in 2020. A goal that seems out of reach for OPEC’s no.2 that continues to struggle to pay the international oil companies it works with while fighting out a war with ISIS.

By Charles Kennedy of Oilprice.com

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