By February 1, 2017 Read More →

Iraq complies with scale, if not absolute level, of OPEC supply cut

OPEC cut

Iraq has complied with 24 per cent of its reduction agreed to in the OPEC supply cut deal. Reuters photo.

OPEC supply cut levels not yet reached by cartel’s second largest producer

 By Alex Lawler and Rania El Gamal

LONDON/DUBAI, Feb 1 (Reuters) – Iraq significantly reduced oil output in January, according to industry sources and export data on Wednesday, but has yet to reach OPEC supply cut levels expected by the cartel from its second largest producer.

A Reuters survey on Tuesday found Iraq lowered output by 200,000 barrels per day (b/d) compared with December – almost all the 210,000 b/d reduction it was supposed to make under the deal by the Organization of the Petroleum Exporting Countries.

The finding that output fell at all was a surprise to some in the market. Baghdad’s initial request to be exempt from the OPEC agreement, plus loading programmes pointing to continued high Iraqi exports, had led to scepticism it would cut.

But Iraqi officials have been stressing that reductions – both in production and exports – would be made.

“We’re not having any technical difficulties with this,” Iraq’s oil minister Jabar al-Luaibi told Reuters in an interview in London last week, referring to implementation of the cut.

While Iraq’s production did indeed fall by 200,000 b/d, according to the Reuters survey it dropped by that amount from 4.710 million b/d in December, rather than from the 4.561 million b/d reference level for Iraq under the OPEC deal.

This means Iraq, in pumping 4.51 million b/d in January according to the Reuters survey, has complied with 24 per cent of its reduction, lower than other big OPEC producers such as Saudi Arabia or the 82 per cent OPEC average.

Shipping data tracked by Reuters and supported by an industry source suggest that most of the reduction came from Iraq’s southern oilfields, where industry sources say the giant Rumaila field has been undergoing planned maintenance.

Iraq’s southern exports averaged 3.26 million b/d in January, according to loading data and industry sources, down from Iraq’s own figure of 3.51 million b/d in all of December, a record high.

In contrast, exports from northern Iraq were little changed in January, according to the data and sources.

(Editing by Mark Potter)

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