24 October 2016, London — Oil prices fell on Monday 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 LCOc1 were down 18 cents at $51.60 a barrel by 0725 ET. U.S. West Texas Intermediate (WTI) crude CLc1 was down 37 cents at $50.48.
Iraqi oil minister Jabar Ali al-Luaibi said Baghdad wants to be exempt 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 (b/d) and 33 million b/d, from September’s 33.39 million b/d. 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 b/d 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 b/d.
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.
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.
*Ahmad Ghaddar; Henning Gloystein; Editing – David Goodman & Dale Hudson – Reuters