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ERBIL, Kurdistan Region — The price of Brent crude oil hit $69 on Friday after OPEC+, an extension of the Organization of Petroleum Exporting Countries (OPEC) extended production cuts on Thursday.
It reached its highest price in more than a year and a half, standing at $69 per barrel. It had reached up to $65 per barrel in February.
The increase in oil prices came after the 14th OPEC and non-OPEC Ministerial Meeting on Thursday, where a decision was made to maintain production cuts for months of March and April, with exceptions given to Russia and Kazakhstan, who will be allowed to increase production by 130,000 and 20,000 barrels per day respectively, according to an OPEC statement.
“The Meeting noted that since the April 2020 meeting, OPEC and non-OPEC countries had withheld 2.3 billion barrels of oil by end of January 2021,” added the statement.
A barrel of Brent oil sold for less than $20 a barrel in April 2020 as a result of a price war between major oil producers Russia and Saudi Arabia, and a crash in global demand for oil amid the coronavirus pandemic. Prices struggled to bounce back for most of 2020 as the pandemic persisted.
With the start of the vaccination process in many developed countries, the price of oil has risen – good news for Iraq, which is highly reliant on oil exports to fund its economy.
“Prices are expected to increase even further and hit even $65, since many countries have started vaccinating their citizens and demand is once again increasing,” Erbil-based oil and gas analyst Arshad Taha told Rudaw English in February.
“Even if Iraq does not start vaccinating – as long as oil-demanding countries do so, Iraq will be in a good economic situation and fill the deficit in its budget,” Taha added.
Iraq received doses of the Sinopharm COVID-19 vaccine earlier this week.
Like some other oil producers, Iraq was hit hard by production cuts as per an Organization of Petroleum Exporting Countries (OPEC+) agreement in April.
Countries like Iraq and Russia, who had previously overproduced oil, had to make extra cuts in their production in the months following the April agreement.
In order to make up for excess production, Iraq pledged in September that it would cut an extra 400,000 barrels per day, on top of the 850,000 already designated by OPEC+.
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