Iraq committed to complying with Opec+ output cuts, oil minister says

Country ready to increase production if required to do so

An oilfield operated by ExxonMobil in Basra, Iraq. Reuters

Iraq is committed to complying with its 220,000 barrels per day oil output cuts in line with the Opec+ policy to tighten global supply and support prices, the country's oil minister said.

The country is ready to increase production if required to do so by the alliance, Reuters cited oil minister Hayan Abdel-Ghani as saying during a conference in Baghdad on Sunday.

“We obliged some oil companies operating in the south to cut production to come in line with Opec+’s agreed rates,” he was quoted as saying.

Iraq, Opec’s second-largest producer, depends on oil revenue to meet 90 per cent of government expenditure.

The country exports about 3.3 million barrels of oil per day, while production in the semi-autonomous Kurdish region amounts to more than 450,000 bpd.

The country is seeking international collaboration to boost its energy supply.

Sharjah energy company Crescent Petroleum signed three 20-year agreements to develop oil and gas fields in Iraq last month.

Iraq has also signed deals with two Chinese companies focusing on gas exploration, Reuters reported, citing an oil ministry source.

At its last meeting, the Opec+ alliance of 23 oil-producing countries agreed to extend its existing oil output cuts of 2 million bpd until the end of 2023.

The move was the latest effort by the group to support prices as a potential economic slowdown weighs heavily on the outlook for fuel demand.

Opec+ agreed in the spring of 2020 to cumulatively cut crude output by a record 9.7 million bpd as it faced a coronavirus-induced crash in oil prices. The alliance then gradually unwound the cuts over the past two years.

Brent, the benchmark for two thirds of the world’s oil, slid 2.32 per cent to settle at $72.97 a barrel on Friday.

West Texas Intermediate, the gauge that tracks US crude, lost 2.36 per cent to close at $66.74 a barrel.

Although crude oil demand is expected to rise “sharply” this year on Chinese demand and a rebound in air travel, the market is currently in a surplus as Russian crude barrels are being rerouted to new destinations, the International Energy Agency said in a report last week.

On Tuesday, Opec raised its forecast for Chinese oil demand growth on the relaxation of Covid-19 measures.

However, it stuck to its global demand estimate of 2.3 million bpd, citing a potential economic slowdown in Europe and the Americas.

Iraq's economic recovery is being supported by higher oil prices, but it remains vulnerable to shocks from market volatility, the International Monetary Fund said in a report last month.

Oil production is expected to rise to 4.6 million bpd this year from 4.4 million bpd last year, and 4.7 million bpd in 2024, to reach about 5 million bpd by 2027, the Washington-based fund said.

Iraq exported an average of about 3.6 million bpd in 2022, with an average price of $96.90 a barrel, the IMF said.

Oil exports are projected to grow to 3.9 million bpd this year and rise to 4 million bpd in 2024, with average prices of $83.10 and $77.80 per barrel, respectively, it added.