Saudi, Iraqi, Russian delegations discuss oil in Baghdad ahead of OPEC+ meeting

Iraq, Saudi Arabia and Russia discussed oil markets in Baghdad on Nov. 26, ahead of a key OPEC+ meeting, where ministers will discuss oil policy for 2025.

Iraqi Prime Minister Mohammed Shia al-Sudani, Russian Deputy Prime Minister Alexander Novak and Saudi Energy Minister Abdulaziz bin Salman discussed global energy market conditions, as well as crude production and supply at the meeting, Iraq's prime minister's office and the Saudi Energy Ministry said in statements.

Russian, Saudi and Iraqi officials discussed the importance of maintaining stability, balance and fair prices and emphasized the role of the OPEC+ group in these efforts, according to the Iraqi statement.

Russian Energy Minister Sergey Tsivilyov, First Deputy Energy Minister Pavel Sorokin and Special Presidential Envoy to the Middle East and North Africa Mikhail Bogdanov were also part of the Russian delegation visiting Iraq.

Overproduction woes

The talks come amid ongoing tension in the group over some member countries producing above their quotas in 2024. This includes Iraq and Russia, which have frequently missed their targets this year.

In October, OPEC's second-largest producer Iraq cut production month on month, but still produced 235,000 b/d above its quota at 4.14 million b/d, according to the Platts OPEC+ survey by S&P Global Commodity Insights. Iraq has vowed to cut production and submitted compensation plans to the OPEC secretariat.

Russia has produced above its OPEC+ quota since April. It produced 9.03 million b/d of crude in October, according to the Platts OPEC+ survey — 52,000 b/d above its quota of 8.98 million b/d, and up 30,000 b/d on the month.

Overall OPEC+ production in October was 169,000 b/d above target, the survey showed.

Russia, Iraq and Saudi Arabia are taking part in voluntary cuts totaling 2.2 million b/d, which will be up for discussion at the OPEC+ meeting Dec. 1. The group currently plans to bring some of these barrels back to market from January 2025, but has already twice delayed these plans amid crude prices that are well below most member countries' fiscal breakeven oil prices.

Platts assessed Dated Brent at $74.29/b on Nov. 25, well below 2024 highs of $93/b in April.

The group faces other major challenges including managing uncertainty over demand growth as well as production volumes outside the group in 2025. Geopolitical uncertainty is also complicating market forecasts, with wars continuing to rage in the Middle East and Ukraine, and a new US administration taking office and potentially making major changes to trade policy in early 2025.