Minister: Iraq to boost crude oil production by year's end

Lucy Hill
April 13, 2017

Opec Secretary-General Mohammad Barkindo said Sunday that he is "cautiously optimistic that the market is already rebalancing", while data on Friday showed the number of active oil rigs in the U.S. rose to the highest since September 2015.

OPEC Secretary General, Mohammed Barkindo, said the compliance among the participants was 86 per cent in January and 94 per cent in February.

Barkindo, at a March 26 meeting of the OPEC/non-OPEC compliance committee in Kuwait, estimated that global oil stocks were 282 million barrels above the five-year average, but that "outside the United States, the global trend of destocking has been broadly on track".

Supply interruptions from Libya offset concerns that OPEC's supply quota plan will flop, driving oil back above USD50 a barrel last week.

Currently, OPEC members are producing 1.8 million barrels of oil less to tackle the rising global oil glut.

"U.S. product stocks need to be watched closely, since they have fallen massively over the last few weeks", said Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt.

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Libya's crude production rebounded to about 660,000 barrels a day as the Opec nation's biggest oil field resumed output, according to a person familiar with the matter.

Data provided to the Financial Times show that crude oil being shipped over the oceans or stored on supertankers has dropped by as much as 16 per cent since the beginning of the year, in a signal that supplies could be dropping faster than many in the market believe.

Iraq is also grappling with a major humanitarian crisis.

But some analysts say a closer examination of the deal shows a bumpy road ahead because producers might be tempted to turn their back on it and prices that remain almost double last year's lows. The stronger dollar also kept oil prices down, with Brent futures falling 15 cents per barrel to $53.38 per barrel and U.S. WTI crude futures down 8 cents per barrel to $50.52 per barrel.

Iraq's budget for this year stands at about 100.67 trillion dinars (US$85.13 billion), running with a deficit of 21.65 trillion dinars, based on an estimated oil price of US$42 per barrel and daily export capacity of 3.75 million barrels.

Yarjani described Saudi Arabia as the most influential decision maker in OPEC for undertaking the largest portion of oil production cut in order to control the market. "Work and cooperation are underway ... to reach the 1.8 (million barrels a day) reduction", he added, without divulging whether Iraq is going to support an extension to that deal.

Other reports by TheDailyFarc

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