Opec+ compliance: Iraq pledges to further slash output

Iraq is further slashing its oil production by 400,000 barrels per day to make up for recent overproduction as part of a new pledge made to oil ministers from the Gulf Cooperation Council (GCC).

The extra cuts in August and September will be on top of the 850,000 bpd Baghdad had committed to chop for the period under an Opec+ supply pact, Iraq's Oil Minister Ihsan Ismaael said in a joint statement with his Saudi counterpart Prince Abdulaziz bin Salman.

Iraq’s total reduction will thus be 1.25 million bpd in August and September to compensate for exceeding its assigned quota in the past three months.

GCC energy ministers, along with Iraq, reaffirmed their commitment to the Opec+ deal during a virtual meeting on Friday, the official Saudi press agency SPA said.

In addition to Abdulaziz and Ismaael, ministers from the United Arab Emirates, Kuwait, Oman and Bahrain also attended the meeting.

They agreed that members that failed to fully comply with the output curbs in May, June and July will deepen their output reduction.

“Full compliance to the Opec+ deal, including making up for the limited progress on adherence, would speed up the recovery of the global oil market to the best interest of oil consumers and producers alike, the energy industry and the world economy,” the joint statement said.

Positive signals

The ministers added that efforts made by Opec+ member states was bound to increase the stability of global oil markets and send positive signals to oil markets.

Ismaael pledged that Iraq would reach 100% conformity by the beginning of August.

Opec and allies — an alliance known as Opec+ — began implementing record supply cuts in May to help prop up the oil market after the onset of the Covid-19 hammered demand.

The alliance — which includes top global oil exporters Saudi Arabia and Russia — agreed in April to cut output by 9.7 million bpd from 1 May and to taper off the cuts to 7.7 million bpd from August to make up for improving demand as the world emerges from lockdowns in the wake of the pandemic.

Iraq agreed to cut output by 1.06 million bpd under the Opec-+ deal. The reductions will have an impact on revenues of international oil companies, which are operating the giant fields of the Basra region that account for the lion's share of Iraqi crude output.

Opec delivered 5.74 million bpd of its share of the cuts in July, equal to 94% compliance, a Reuters survey found.

Lebanon relief

Meanwhile, Iraq is sending oil products to Lebanon to help the energy starved nation following a massive explosion last week in the capital Beirut, which caused widespread death and destruction.

Ismaael flew to Beirut following the blast to meet with Lebanese Prime Minister Hassan Diab. Iraq did not specify the quantities of the oil products earmarked for Lebanon.