Iraq will honor its commitment to OPEC's oil production cuts and would like to see oil prices at about $65 a barrel, its oil minister said Thursday in comments that could calm fears that the cartel's No.2 producer was unwilling or unable to reduce output.
Iraq has already cut output by 170,000 barrels and would this week take out another 40,000 barrels to hit its target of a 210,000 barrels per day reduction to 4.35 million barrels per day, Jabbar Al-Luabibi told reporters Thursday at the Atlantic Council Global Energy Forum in Abu Dhabi.
"This is definitely our policy, we will not deviate from this," the minister said. Iraq is "hoping for a better (oil) price...we are looking at $65, something like that."
West Texas Intermediate futures for February traded Thursday at $52.49, 0.5% higher than its Wednesday price. Brent crude futures for delivery in March traded at $55.51, up 0.71%.
Iraq has emerged as a potential weak point in OPEC's effort to reduce oil output, after evidence from shipping schedules suggested it was preparing to increase exports from its southern ports in Basra next month.
"So far areas of slippage/uncertainty focus on Iraq (exports expected to be +100kbpd in Feb, despite claim of 160kbpd of cuts), Russia (100kbpd cuts so far vs 200kbpd proposed) and South Sudan," Goldman Sachs analyst noted on Wednesday.
OPEC in November agreed to cut output by a total of 1.2 million barrels for six months from the start of 2017, and in December struck a subsequent deal with non-OPEC producers, and notably Russia, to cut a further 600,000 barrels per day.
Oil Industry analyst S&P Global Platts said Wednesday that OPEC's December output fell to 32.85 million barrels per day, down 280,000 barrels per day on November, but warned that the main contributor to the fall was outages due to maintenance in Nigeria, which is exempt from the OPEC agreement.
"Nigerian production fell to 1.44 million b/d from 1.68 million b/d in November, as planned maintenance halved loadings of its key export grade Agbami," S&P Global Platts noted in a report suggesting that a rebound in Nigerian production, coupled with an increase in output from Libya, which is also exempt from the OPEC agreement, could undermine OPEC's efforts to boost oil prices.
"The crucial question is whether OPEC and non-OPEC can make the compliance stick long enough to clear out the stock overhang," said Eklavya Gupte, senior editor for S&P Global Platts. "If both Libya and Nigeria post a swift output recovery and compliance starts to wane, the deal would unravel."