Iraq: Oil output must rise to compensate for price collapse

JAMES HERRON

DAVOS, Switzerland (Bloomberg) -- Iraq, the nation adding more new oil to global markets than any other supplier in OPEC, said it needs to boost production and exports of crude to compensate for collapsing prices.

“Because of the new challenges, especially the price of oil, Iraq has to try its best to raise it oil production and exports,” Deputy Prime Minister Rowsch Nuri Shaways said at the World Economic Forum in Davos, Switzerland.

Iraq has lost about 50% of its revenues because of the slump in oil, Shaways said. An agreement last month between the country’s federal government and the semi-autonomous Kurdish region will boost exports by more than 550,000 bopd, he said. The nation is pumping at about 4 MMbopd, already a record, Oil Minister Adel Abdul Mahdi said Jan. 19.

Oil slid more than 50% since June as the U.S. pumped at the fastest pace in more than three decades and the Organization of Petroleum Exporting Countries maintained its production target of 30 MMbopd, resisting calls to makes cuts to reduce a supply glut.

OPEC’s crude output rose by 80,000 bpd last month to 30.48 MMbpd as additional oil from Iraqi fields more than offset a collapse in Libyan production, the International Energy Agency said in its monthly market report Jan. 16. The Paris-based adviser to 29 nations cut its forecast for supply growth outside OPEC by 350,000 bopd to 950,000, with reductions for Columbia, Canada and the U.S.

Upside Attempt

“The expected slowdown in U.S. production continues to be surpassed by increased OPEC production,” Ole Sloth Hansen, an analyst at Saxo Bank A/S in Copenhagen, said by email. “The market was actually getting ready to make an upside attempt” until Iraq’s oil minister said output was at a record, he said.

Oil prices won’t rebound until production growth slows, Pulitzer Prize-winning oil historian Daniel Yergin said in an interview in Davos.

Brent crude, the international benchmark, fell 48% last year and lost a further 15% this month. Futures for March settlement advanced 1.3%, or 64 cents, to $48.63/bbl on the London-based ICE Futures Europe exchange at 9:46 a.m. local time.

“We still believe the oil price will rise,” Shaways said. “It is not permanent, this situation.”