• 4 minutes US-backed coup in Venezuela not so smooth
  • 7 minutes Why Trump will win the wall fight
  • 11 minutes Oil imports by countries
  • 13 minutes Maduro Asks OPEC For Help Against U.S. Sanctions
  • 41 mins Climate Change: A Summer of Storms and Smog Is Coming
  • 14 hours Venezuela: Nicolas Maduro closes border with Brazil
  • 4 hours Teens For Climate: Swedish Student Leader Wins EU Pledge To Spend Billions On Climate
  • 3 hours Iran Starts Gulf War Games, To Test Submarine-Launched Missiles
  • 2 hours The Quick Read On MBS's Tour of Pakistan, India And China
  • 12 hours Tension On The Edge: Pakistan Urges U.N. To Intervene Over Kashmir Tension With India
  • 3 hours BMW to add 2,000 more jobs at Dingolfing plant
  • 12 hours Itt looks like natural gas may be at its lowest price ever.
  • 15 hours Amazon’s Exit Could Scare Off Tech Companies From New York
  • 1 day students walk out of school in protest of climate change
  • 11 hours Saudi A to Splash $100 Bln on India
  • 6 hours NEW FERUKA REFINERY
Alt Text

Oil Heads Lower On Small Inventory Build

Oil prices fell slightly on…

Alt Text

EIA Inventory Report Pushes Oil Prices Lower

Oil prices fell somewhat on…

Rakesh Upadhyay

Rakesh Upadhyay

Rakesh Upadhyay is a writer for US-based Divergente LLC consulting firm.

More Info

Trending Discussions

Iran And Iraq To Ramp Up Oil Production Despite OPEC Cuts

Though OPEC has managed to achieve a high standard of compliance, it has mostly been due to the oversized cut by the largest member of the group—Saudi Arabia. Meanwhile, the actions and statements of the second and third largest producers in OPEC are throwing worrying signs at the oil bulls.

Saudi Arabia is in a catch 22 situation. As the defacto leader of OPEC, it is left to implement most of the production cuts to ensure a high level of overall group compliance. Saudis know that OPEC might not get another chance if it doesn’t adhere to its production cuts.

Another reason is the forthcoming IPO of Saudi Aramco. Without higher oil prices, Saudi Arabia might not get the valuation it is expecting for its crown jewel. Aramco’s successful listing is vital for reaching Saudi Arabia’s ‘Vision 2030’ objective.

However, two OPEC members, Iran and Iraq, are exploiting Saudi Arabia’s precarious position by taking steps to boost production. The Kingdom will have to contend with increased production from Iran and Iraq, along with tackling the U.S. shale oil producers.

According to the IEA, Iraq will increase its output to 5.4 million barrels per day by 2022, which is significantly higher than the earlier estimates of an increase to 4.6 million bpd by 2021. Similarly, Iran is expected to boost production by 400,000 bpd to reach 4.15 million bpd production in 2022.

The Iraqi Oil Ministry and the Iranian Oil Ministry have signed a memorandum of understanding to bury their differences on joint oil fields and build a pipeline to export crude oil from the Kirkuk fields, in the north of Iraq, through Iran, reported the Al Monitor.

Iraq, which produced 4.47 million bpd in January, well above its quota of 4.35 million bpd, is capable of raising its output to 5 million bpd in the second half of this year, said Iraq’s Minister of Oil, Jabbar Ali Al-Luiebi.

"We achieved this great achievement of 4 million barrels per day ... middle of 2016, and now we have climbed up and we are reaching about 5 million barrels per day beginning of second half of this year," Al-Luaibi said during an interview at CERA Week by IHS Markit, reports CNBC. Related: Oil Prices Continue Plunging As Speculators Rush For The Exit

This is bearish for oil because, along with Saudi Arabia, Iraq will also hold spare capacity that can be ramped up during supply outages.

"Obviously, it's bearish. They're going to have to show considerable production constraint having that spare capacity. That's the kind of capacity historically only the Saudis have had," said John Kilduff, founding partner at energy hedge fund Again Capital, reports CNBC.

Meanwhile, Iran has managed to increase its exports to 3 million bpd, its highest level since 1979. The landmark was reached for just a day, in the current Iranian month that began Feb. 19, said the Iranian Oil Minister Bijan Namdar Zanganeh, according to state news agency IRNA, reports Bloomberg.

Iran wants to increase its production to 5 million bpd by 2021. However, it needs investments by foreign investors to achieve that target. This will not be a new high in production for Iran, because it used to pump in excess of 6 million bpd in the 1970s, before the Islamic Revolution drove the western investors away. A fresh round of foreign investment is the key, which is yet to take off in Iran.

Nevertheless, with every major oil producer looking to boost production, the oil glut is here to stay.

By Rakesh Upadhyay for Oilprice.com

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage

Trending Discussions


Leave a comment
  • david on March 10 2017 said:
    By 2022...there is a good chance demand will be higher or lower by then as well.
  • Rick on March 10 2017 said:
    SA didn't have the stones to finish off the job they set out to do three years ago, and that was before the Iran agreement.
    Now they are back to being the swing player.
    Time to reschedule that Aramco IPO.
  • Gary on March 14 2017 said:
    OPEC and NON-OPEC players need to learn to produce what the market demands after years of the world taking every drop that was offered. If not, then they will sell their future down the drain for $35 oil

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News