OPEC mulls further 1% reduction in oil supply cut, Iraqi minister says

Oil producers, including Iraq, are considering reducing a further 1% from the global oil output cut deal to help in rebalancing the market while some are also favoring extending cuts until the end of 2018, according to Iraqi Oil Minister Jabbar al-Luaibi.

Producers are talking about what to do next regarding the cuts, al-Luaibi said at a conference in the emirate of Fujairah in the United Arab Emirates (UAE). There is “no firm decision yet” on further cuts or any extension of the current reductions, he said.

“Some think that cuts should be extended beyond March, three or four months, or six months, or maybe till the end of 2018,” al-Luaibi said. “Some, like Ecuador and other countries, even Iraq, think there should be another cut of 1%.”

The Organization of Petroleum Exporting Countries (OPEC) and major suppliers including Russia agreed to trim output by 1.8 million barrels to clear a global glut, led partly by US shale production. They extended their accord through the first quarter, and ministers from Saudi Arabia, Venezuela, the UAE and Russia have said producers may consider prolonging the cuts further. Benchmark Brent crude has slid about 2% this year and is currently trading at less than US$56 a barrel.

OPEC’s decreases in output “are going OK,” while non-OPEC compliance with the targets is less than that of the group, though this is to be expected, al-Luaibi said. Oil prices and the global market are improving, and Iraq sees a “positive trend” in crude markets, he said. Oil demand will continue to increase in the coming two to three years, he said.

Iraq, OPEC’s second-biggest producer, is exceeding its targeted reduction of 210,000 barrels a day by cutting 270,000 barrels a day, al-Luaibi said. Iraq is now pumping 4.32 million or 4.35 million barrels a day, he said. Before the cuts started in January, the country was pumping 4.565 million barrels a day, he said.