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Iraq Looks To Be Exempted From OPEC+ Cuts In Q1 2021

Iraq has asked OPEC to be exempted from oil export cuts in the first quarter of 2021, the oil minister of OPEC’s second-largest producer and the least compliant member of the pact, said on Wednesday.

According to remarks of Iraqi Oil Minister Ihsan Abdul Jabba to local media, as reported by Reuters, Iraq has raised the issue with OPEC at several meetings.

“The minister revealed efforts to exempt Iraq from the agreement to cut exports in OPEC and the subject has been broached with the organisation’s oil ministers in three consecutive meetings,” Iraqi state news agency INA reported.

Iraq relies almost entirely on oil revenues for its government income, so the oil price crash and OPEC+ cuts are making things very difficult for the Iraqi economy and its budget revenues.

Oil revenues are critical to Iraq’s budget income, but in recent months OPEC’s second-largest oil producer has come under pressure from its fellow OPEC+ partners led by Saudi Arabia to stop cheating on their production quotas and finally start complying with the OPEC+ agreement.

Iraq promised additional cuts of around 400,000 bpd in August in order to compensate for the lack of compliance with the deal in the previous months. These additional cuts are on top of Iraq’s per-quota cut of 850,000 bpd under the OPEC+ pact.

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.

Despite the pledges and the reduced exports, Iraq has yet to comply with the production cut deal.

Iraq’s crude oil exports fell in August to 2.597 million bpd compared to July’s exports of 2.763 million bpd, oil ministry data showed earlier this week.

According to the monthly Reuters survey, Iraq reduced its oil production in August and reached its highest compliance in recent years, but that compliance rate was still short of the 100-percent ‘full conformity’ that OPEC+ demands.

By Tsvetana Paraskova for Oilprice.com

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