ERBIL, Kurdistan Region – Iraq will adhere to the OPEC+ agreement ‘100 percent’ from August, Iraq's oil minister informed his Saudi counterpart in an official phone call on Monday.
Oil Minister Ihsan Abdul-Jaber held a phone call with Saudi Arabian energy minister Abdul-Aziz Bin Salman, in which both sides stressed the need for Iraq to adhere to the agreement and reduce its oil exports.
“Iraq’s level of commitment to the OPEC+ agreement has reached 90 percent during the month of July,” read a joint statement released on Monday.
“Iraq will be fully committed to the OPEC+ agreement starting from August, and will compensate during the months of July, August and September for the overproduction during May and June,” the statement added.
For years, oil giants have coordinated their production benchmarks through a deal known as OPEC, or the Organization for Petroleum Exporting Countries. OPEC+ also includes non-member countries that export crude oil.
Iraq’s adherence to the OPEC+ agreement was only 46 percent during the month of June, and even less during the month of May, Abdul-Jaber said during a televised interview with al-Sharqiya TV.
Daily average exports dropped from 3.21 million barrels in May to 2.82 million barrels in June, and are expected to be further reduced, according to oil ministry data.
Despite the cuts, Iraq’s oil revenues for the month of June were $2.86 billion - up almost $800 million from May, when revenue was $2.09 billion.
The new numbers look promising for Iraq, which depends on oil income for roughly 90 percent of its annual budget.
When global demand for oil began to shrink as a result of the coronavirus outbreak, Saudi Arabia proposed cutting production to stabilize prices.
Russian oil companies, struggling to find buyers under US sanctions, refused to cut production. Saudi Arabia responded by flooding the market with cheap oil to strong-arm the Russians.
Moscow and Riyadh reached a deal on April 12 to cut oil production by 9.7 million bpd – equivalent to 10 percent of the world’s daily supply – for May and June.
OPEC producers and allies agreed to continue the reduction until April next year. Iraq has also pledged to adhere to the agreement.
