Oil prices fall as Iraq resists joining Opec deal to cut production
25 Oct 2016 - 0:55
LONDON: Oil prices fell yesterday as Iraq said it wanted to be exempt from an Opec deal to cut production, though losses were capped by Iran saying it would encourage other members to join an output freeze.
Brent crude futures were down 45 cents at $51.33 a barrel by 1340 GMT. US West Texas Intermediate (WTI) crude was down 61 cents at $50.23.
Iraqi Oil Minister Jabar Ali Al Luaibi said Baghdad wants to be exempted from any production cut the Organization of the Petroleum Exporting Countries is aiming to achieve.
Falah Al-Amiri, head of Iraqi state oil marketer SOMO, added that Iraq’s market share had been compromised by the wars it has fought since the 1980s.
“We should be producing 9 million (barrels per day) if it wasn’t for the wars,” he said.
Opec announced plans last month to reduce its output to between 32.5 million barrels per day (bpd) and 33 million bpd, from September’s 33.39 million bpd. The group will iron out the details of how it will hit the target at its next meeting in Vienna on Nov. 30.
“A decision to cut to 33 million bpd should keep the crude price basis Brent in the $50-$60 band, not least because it shows that Saudi policy has changed, that Opec is serious and can rise above political disagreements,” David Hufton, of consultancy PVM, said in a note.
Iraq said it could raise output slightly this month from September’s 4.774 million bpd.
A short-term cap in oil output would reduce market volatility, Russian Energy Minister Alexander Novak said on Monday at a meeting with Opec Secretary-General Mohammed Barkindo, as both look to stabilise prices.
Novak also told a Russian television channel he was confident an agreement between Russia and leading oil exporters on oil market stabilisation would be eventually reached.
Comments from Iran’s deputy oil minister Amir Hossein Zamaninia, however, helped to push prices higher earlier in the session. He said Tehran would encourage other Opec members to join an output freeze, adding that $55-$60 a barrel is a fair price to bring stability to the market.
Analysts said that oil markets, which have been dogged by two years of oversupply, might be rebalancing in terms of production and consumption.
“The market moved into a small deficit in Q3, will remain so in Q4 and then the deficit will expand significantly in 2017,” Barclays bank said in a note to clients.
OPEC pumped a record 33.75 million barrels a day in September, with Saudi Arabia accounting for 10.58 million of the total, according to data compiled by Bloomberg.
The discount for December WTI versus January futures widened as much as 11 cents to 69 cents a barrel after Enterprise Products Partners LP shut the Seaway crude pipeline following a leak in Cushing, Oklahoma, the delivery point for Nymex contracts.
China’s imports of crude from Russia fell to 3.96 million tons in September, 2.1 percent lower than a year earlier, according to data from the General Administration of Customs. Libyan oil output will rise to 600,000 barrels a day “soon” and may reach 900,000 barrels if the El Sharara and El Feel fields reopen, Prime Minister Fayez al-Sarraj said on state television.