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Global Energy Advisory - 25th November

Global Energy Advisory - 25th November

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Iran And Iraq To Increase Oil Output Despite OPEC Meeting In September

Oil Rig

Iran and Iraq have served up the latest round of comments on the highly anticipated—and highly analyzed—OPEC meeting in Algiers that many hope will end with a freeze agreement by all members.

Previous comments from Saudi Arabia, Russia, and even Iran have held a fair amount of market sway up until now, but the market may have a limited attention span before tuning out, and tuning into other market fundamentals, such as inventory reports from the API and EIA.

In support of Russia’s comments last week that spoke of its support for a freeze on the condition that Iran be allowed to make a complete return to the market, an official from Iran’s state-run oil company on Thursday said that the meeting in September would be too early to discuss freezing output, and that they wouldn’t be amenable to discussing a production cap until output reaches pre-sanction levels.

"As soon as we come back to pre-sanction levels, we will be ready to discuss quotas and level of production," Mohsen Ghamsari, director for international affairs at National Iranian Oil Company, said in an interview in Singapore. "The 4 million bpd production level is not very far from our hands. I hope by the end of 2016 or early next year, we would be able to reach that level."

Iraq, OPEC’s second largest producer, also chimed in when Falah Al-Amri, director general of Iraq’s Oil Marketing Company (SOMO), said on Thursday that Iraq would support a freeze “for a certain period”.

Related: Oil Under Pressure As Shell Lifts Force Majeure On Nigerian Exports

Al-Amri failed to publically disclose what level would be acceptable, and just how long “a certain period” constituted, but did announce at a conference its plans to increase oil production by 100,000 to 150,000 barrels per day in the near term. In addition, Iraq has not abandoned its plans to pump 6 million barrels per day by 2020—about 1.5 million bpd more than current production.

Adding dirt into the already murky production freeze waters, Al-Amri said, “Iraq does not want to flood the market with oil; others might, but we don’t. We are not in a hurry. We just want to increase our production quietly.”

By Julianne Geiger for Oilprice.com

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