Iraq committed to OPEC+ crude production cuts, says acting oil minister

Dubai — Iraq is committed to the OPEC+ oil production cuts agreement, the acting oil minister said Thursday, dismissing media reports that had questioned the ability of OPEC's second largest member to trim output by 1.061 million b/d in May and June.

"The Ministry of Oil is completely committed to reducing Iraq's oil production according to the terms of the OPEC+ agreement,” acting oil minister Ali Allawi said in a statement.

A Reuters report Wednesday, citing unnamed Iraqi officials, said the country was cutting its oil output by around 700,000 b/d after it failed to persuade global oil companies operating its giant fields to agree to deeper reductions.

OPEC+ agreed in April on a record output cut of 9.7 million b/d for May and June, to be followed by gradual easing of curbs through to April 2022.

OPEC+ compliance

Iraq has failed in the past to comply with OPEC+ cuts, pumping above its quota for most of 2019. Several Iraqi politicians have criticized Iraq's agreement to trim its output by over 1 million b/d in May and June, arguing that the pact was sanctioned by a caretaker government that should not have approved such a big cut.

Allawi, who is the finance minister in the new government of Prime Minister Mustafa al-Kadhimi, was appointed acting oil minister after parliament postponed last week a vote on the oil ministry post.

Kadhimi, most members of his cabinet and his government program won parliament's vote of confidence last week, six months after the resignation of the government of former prime minister Adel Abdul Mahdi following protests demanding political and economic change.

The International Energy Agency's executive director Fatih Birol said on Thursday that Iraq may face difficulties in cutting its oil production.

"Some countries have more difficulties compared to others, given their economic situation, political situation and others," said Birol in a webcast for its monthly oil market report, adding:

"Now I would like to, especially, single out Iraq, a country which has a lot of difficulties and [I] hope Iraq under the leadership of the new prime minister will be able to address oil as well as the electricity market issues and we will be working very closely with Iraq to support them."

Biggest hit

The coronavirus pandemic and the oil price crash have crippled Iraq's energy industry.

Iraq took the biggest hit to production for OPEC members in April, losing 110,000 b/d as low fuel demand and a lack of product storage space forced its refineries to sharply lower crude runs, according to a latest S&P Global Platts OPEC survey. Production was at 4.54 million b/d in April.

Unlike other fellow producers in OPEC, such as Saudi Arabia and the UAE, which pumped at record levels in April, Iraq was not able to open the taps last month despite the expiry of the old OPEC+ cuts agreement in March.

For example, Iraq's state oil marketer, State Oil Marketing Organization, struggled in April to sell crude to India, one of its biggest customers.

The outbreak of the coronavirus and lockdowns have also forced Malaysia's Petronas to evacuate staff in March and stop production from the southern oil field of al-Gharraf, which pumped some 90,000 b/d.