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Iraq has fallen below agreed oil production cuts

Oil news
A tanker, left, leaves the Basra Oil Terminal as another tanker, top right, loads oil in The Gulf fifty kilometers south of Iraq. Photographer: Shawn Baldwin/Bloomberg News.

Iraq said it has gone deeper than its pledged oil-output cut, potentially ending a seven-month period in which OPEC saw the nation falling short of its agreed curbs.

The second-largest producer in the Organization of Petroleum Exporting Countries is pumping 4.32 million barrels a day of oil, below the 4.35 million target agreed last year, Iraqi Oil Minister Jabbar Al-Luaibi said on Friday. However, he said the government in Baghdad doesn’t have reliable figures for shipments from the semi-autonomous Kurdish region, which accounts for about a tenth of the nation’s production, according to data compiled by Bloomberg.

“We are the country that is really committed” to the OPEC agreement, Al-Luaibi said at a briefing in Moscow, following a meeting with his Russian counterpart. Kurdistan’s export figures are “foggy, we don’t know much about it,” he said.

Iraq has been under pressure to show it’s bearing its fair share of efforts by OPEC and Russia to eliminate a global oil surplus by cutting production until the end of the first quarter of 2018. The implementation of its pledged 210,000 barrel-a-day supply reduction has been patchy, rising as high as 87 percent in April but then falling to just 28 percent in June, according to monthly estimates published by OPEC. Weakening compliance has fueled doubts about the effectiveness of the agreement as oil prices have languished near $50 a barrel, a price too low for most members to balance their budgets.

There are estimates that Kurdish exports stand at 300,000 to 350,000 barrels a day, “but they don’t reflect the accurate figures to us,” Al-Luaibi said. The region hasn’t published its own production figures since November.

Exports of crude from Kurdistan, which also include some output from fields in northern Iraq outside the semi-autonomous region, averaged 581,000 barrels a day in August, according to tanker-tracking data compiled by Bloomberg. The flow was up 31,000 barrels a day from July and was the highest since May, the data show.

Iraq as a whole pumped 4.49 million barrels a day in August, a slight reduction from July, according to a Bloomberg News survey of analysts, oil companies and ship-tracking data.

It’s too early to say whether OPEC and its allies will need to extend the production cuts beyond the first quarter of 2018, Al-Luaibi said. That decision will depend on the stability of prices at the time of the group’s next meeting in November, he said. If there is a resolution to prolong the curbs, Iraq would comply, he said.

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