Monday , November 20 2017

Oil market improving on compliance with cutbacks – Saudi minister Al-Falih makes high profile visit to Iraq

BAGHDAD, Oct 21, (Agencies): The global oil market is improving and stabilising as oil exporting nations are fully complying with an agreement to curb supply in order to lift crude prices, Saudi Oil Minister Khalid al-Falih said in Baghdad on Saturday.

The secretary general of the Organisation of the Petroleum Exporting Countries, Mohammad Barkindo, on Oct. 3 said compliance with the output cut deal by OPEC and non-OPEC nations was “extremely high”.

“The market has improved a lot but has still some way to go,” Falih told reporters during a visit to the Iraqi capital, adding that “compliance within the group of 24” nations taking part in the cutbacks deal “exceeds 100 percent”.

He didn’t make it clear if every one of the 24 nations was complying with the cut or if they are in compliance when taken together.

OPEC said in a statement on Saturday that a joint technical OPEC and non-OPEC committee saw September compliance with the output deal at 120 percent, the highest level since the pact started in January.

OPEC, Russia and other producers have reduced production by about 1.8 million barrels per day (bpd) since the start of 2017, helping to boost oil prices. The cutbacks should continue until March 2018.

Saudi Arabia and Iraq were in agreement on the need to “fully comply” with cutbacks in crude output agreed by OPEC, Russia and several other producers to push up prices, Falih said after meeting with his Iraqi counterpart Jabar al-Luaibi. Falih didn’t say whether he would recommend that curbs be extended further when OPEC meets next month.

Barkindo earlier this month said he expected all 24 OPEC and non-OPEC nations participating in the global oil output cut deal to take part in OPEC’s conference in November.

The Iraqi oil ministry confirmed in a statement Falih and Luaibi had agreed to cooperate in implementing output cutbacks. Saudi Arabia and Iraq are OPEC’s largest and second largest producers.

The two countries began taking steps towards detente in 2015 after 25 years of troubled relations starting with the Iraqi invasion of Kuwait in 1990. Falih visited Iraq earlier this year.

“The best example of the importance of cooperation between our two countries is the improvement and stability trend seen in the oil market,” said Falih to applause from the audience of Iraqi ministers, senior officials and businessmen.

Al-Falih made a high profile visit to Iraq on Saturday, calling for increased economic cooperation and praising existing coordination to boost crude oil prices.

In a speech at the opening of the Baghdad International Exhibition, Falih said cooperation between Iraq and Saudi Arabia contributed to “the improvement and stability we are seeing in the oil market”. Falih is the first Saudi official to make a public speech in Baghdad for decades. The two countries began taking steps towards detente in 2015 after 25 years of troubled relations starting with the Iraqi invasion of Kuwait in 1990.

Tension remained high after the 2003 US-led invasion of Iraq, which toppled Saddam Hussein. The American occupation of Iraq empowered political parties representing Iraq’s Shi’ite majority, close to Saudi Arabia’s regional rival Iran.

Iraq is seeking economic benefits from the thaw with Riyadh while Saudi Arabia hopes closer ties would help rollback Iran’s influence in the region.

“The best example of the importance of cooperation between our two countries is the improvement and stability trend seen in the oil market,” said Falih, to applause from the audience of Iraqi ministers, senior officials and businessmen. Falih and Saudi Foreign Minister Adel al-Jubeir held talks earlier this year in Baghdad, paving the way for visits to Saudi Arabia by Iraqi Prime Minister Haider al-Abadi and popular Shi’ite cleric Moqtada al-Sadr.

Saudi Arabia and Iraq are respectively the biggest and second biggest producers of the Organization of the Petroleum Exporting Countries (OPEC).

The Iraqi oil ministry said Falih and his Iraqi counterpart, Jabar al-Luaibi, agreed to cooperate in implementing decisions by oil exporting countries to curb global supply in order to lift crude prices. Iraq said it hiked southern oil production by 200,000 barrels per day on Saturday to compensate for a halt in pumping in Kirkuk province because of its conflict with the Kurds.

“Basra Oil Company (BOC) started to pump an extra 200,000 bpd from the south and centre” in addition to the 2.2 million barrels exported daily, Oil Minister Jabbar al-Luaybi said in a statement.

He said the move was to compensate for the loss of exports from the oil-rich northern province of Kirkuk which Iraqi security forces retook from Kurdish fighters in a military operation this week.

The arrangement would continue “until exports from the north return to normal”, Luaybi said, adding it would not violate Iraq’s OPEC commitment to stick to a lower output quota.

Before the conflict, the Iraqi Kurds were exporting an average of 550,000 bpd via a pipeline through Turkey, half of which was pumped from the Kirkuk fields where production has halted.

At the opening of the Baghdad International Fair on Saturday, Saudi Energy Minister Khalid al-Falih hailed what he called “the new Iraq, on the ambitious road to prosperity and growth while strengthening its relations with the world”.

Iraqi Prime Minister Haider al-Abadi is on Sunday to take part in Riyadh along with 10 of his ministers in a meeting of the two countries’ coordination commission, according to Iraq’s ambassador to the Saudi kingdom, Roshdy al-Ani.

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