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Oil prices are set to recover beginning in the second quarter next year, helping Iraq’s oil industry and its plans to increase production capacity, Iraqi Oil Minister Ihsan Abdul Jabbar said at a virtual conference on Tuesday.
Currently, the OPEC+ production cuts are delaying oil projects in Iraq, Jabbar said at the online CWC Iraq Petroleum conference.
Next year could be more constructive for oil prices, according to the minister.
“I think quarter two, 2021 will be more attractive to every aspect of our business,” Jabbar said, as carried by Reuters.
OPEC’s second-largest producer Iraq, which has long planned to significantly boost its oil production capacity, should increase the capacity to 7 million barrels per day (bpd) within six years, compared to its current production capacity of some 5 million bpd, the Iraqi oil minister said.
Last week, Jabbar said that Iraq expects the pressure on oil prices to continue through at least the first quarter of 2021. The minister sees the average for Brent Crude prices during January-March 2021 at $45 a barrel. As a result of this expectation, Baghdad will be basing its 2021 budget on an oil price level of $42 a barrel, Jabbar told Iraqi daily Al Sabah.
Iraq is one of the most oil-dependent economies, even by OPEC standards, and has seen its budget revenues plummet after oil prices crashed in March.
Oil revenues are critical to Iraq’s budget income, but in recent months Iraq 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.
The OPEC+ Joint Ministerial Monitoring Committee (JMMC) once again stressed at its meeting on Monday that it expects full conformity from all pact members, while laggards such as Iraq have to cut deeper in Q4 to compensate for previous lack of compliance.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.