Qatari Energy Minister Mohammed Al Sada told reporters on Thursday that both Iran and Iraq have been asked to freeze production at “current levels” as the Organization of Petroleum Exporting Countries (OPEC) scrambles to finalize the terms of bloc-wide production cap at the end of this month.
"We are discussing with both countries on that and we are looking at various ways and means of coming to a mutual understanding," Sada said, according to ArabianBusiness.com.
Qatar, the world’s largest liquefied natural gas (LNG) producer, also hopes the decline of oil and gas investments will prevent the current supply glut in the oil market from increasing in size.
OPEC’s oil production cut will cap output at 32.5 million barrels per day in order to rebalance the supply-side of the oil market, Saudi Arabia’s oil minister Khalid al-Falih said earlier today, thus clarifying the extent of the much-anticipated reduction deal.
OPEC must cut more than 1 million bpd if it wants to squeeze under that ceiling, and Saudi Arabia will be expected to do most of the heavy lifting as Iran and Iraq – two of the bloc’s largest oil producers – will only be freezing production at current levels, not cutting.
OPEC’s production was 33.64 million bpd last month—a new record, according to OPEC secondary sources. The newly announced cap could burden OPEC members with even deeper cuts than they had originally hoped to weather.
Previous reporting on the coming deal said that Iran, Libya and Nigeria would be exempted from the agreement’s production restraints due to the international sanctions, civil wars and domestic insurgencies each country has faced, respectively.
Once the special exemptions were announced, Iraq also demanded an exemption from the deal as it faces the hiking costs of the battle against the Islamic State in Mosul – one of the terrorist group’s last major strongholds in the country.
By Zainab Calcuttawala for Oilprice.com
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Zainab Calcuttawala is an American journalist based in Morocco. She completed her undergraduate coursework at the University of Texas at Austin (Hook’em) and reports on…