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The one OPEC producer that has been furthest off target to cut oil output as per the cartel’s deal—Iraq—is now claiming that the agreement implied that exports, rather than production, should be the baseline for the cuts, Iraq’s oil minister Jabbar al-Luaibi has told S&P Global Platts in an interview.
“This time, for the first time, OPEC implied that production should be separate from export and their baseline is exports not production,” the minister told Platts.
Those words may come as news for fellow OPEC members, most notably Saudi Arabia, which has been cutting deeper than required so far, but signaled with its self-reported higher output in February – still lower than its ceiling, though – that it would not continue to make up for rogue cartel members.
OPEC’s agreement from November 30—which Iraq has signed—does not mention the word “exports” at all, and clearly states that the cartel had “decided to reduce its production by around 1.2 mb/d to bring its ceiling to 32.5 mb/d, effective 1st of January 2017”. The headnotes and footnotes in the table specifying each producer’s share of cuts also clearly states that it’s “production” that is being measured.
The introduction of the “exports” wording by the Iraqi oil minister is not a result of language misinterpretation either. As Platts noted, Luaibi, who often speaks to the media in English, clarified several times during his interview that the deal’s base is exports, not production.
Asked if Iraq has had some special deal to cut from exports, Luaibi told Platts: “All countries – export. It’s export.”
Related: Saudi Arabia Tries To Reassure Markets After Oil Price Plunge
The OPEC deal calls for Iraq cutting 210,000 bpd and bringing and keeping its production to a maximum of 4.351 million bpd between January and June.
OPEC’s latest Monthly Oil Market Report pegged Iraq’s production in February at 4.414 million bpd, according to secondary sources, while Iraq itself directly reported to OPEC production of 4.566 million bpd.
Before this “export” twist in the deal interpretation, Luaibi said last week that his country’s compliance rate with the agreement had reached 85 percent.
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.