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 18 cents at $51.60 a barrel by 1125 GMT. US West Texas Intermediate (WTI) crude was down 37 cents at $50.48.
Iraqi oil minister Jabar Ali al-Luaibi said Baghdad wanted to be exempt from any production cut the Organisation of the Petroleum Exporting Countries was 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 nine million [barrels per day] if it weren’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 November 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.
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.
In the meantime, Russian Energy Minister Alexander Novak said a short-term cap in oil output would reduce market volatility. He was speaking yesterday at a meeting with Opec secretary-general Mohammed Barkindo, as both are looking at ways to stabilise prices.
Russia is the world’s largest oil producer but not a member of the Opec and its budget has been hit by low oil prices, the same as for many Opec nations.
Novak, in Vienna after visiting Saudi Arabia over the weekend for talks with Saudi Energy Minister Khalid al-Falih, said sharp falls in the price of crude threatened to trigger an oil deficit and unpredictable volatility in prices.
“That’s why... [an oil output] freeze or even a cut for a certain period of time is a right decision for global energy ... Being a short-term measure, an oil output cap may help to lower volatility in the market and make it more stable,” Novak said. Opec’s Barkindo said before yesterday’s meeting, which also included Qatar Energy Minister Mohammed al-Sada, that Russia and Opec were “committed to stable and predictable markets”.
“While there are signs that the rebalancing of the fundamentals is under way with overall non-Opec supply contracting this year and demand... at healthy levels, the large stock overhang continues to be a major concern,” Barkindo said.
Neither Novak nor Barkindo said at which levels Russia could cap its production, which reached a record-high 11.1 million bpd in September.