Iraqi oil minister says OPEC deal will help to stabilize oil market

Iraqi Oil Minister Thamer Ghadhban speaks to the media at the ministry's headquarters in Baghdad, Iraq October 31, 2018. (REUTERS)
Updated 11 July 2019

Iraqi oil minister says OPEC deal will help to stabilize oil market

  • Baghdad studies contingency plans to deal with possible disruption, including new export routes

BAGHDAD: An agreement between OPEC and its allies to extend oil output cuts until the end of March 2020 will lower inventories, help stabilise the market and address price volatility, Iraqi Oil Minister Thamer Ghadhban said on Wednesday.
Asked about OPEC’s position on prices, Ghadhban said the general view was that $70 per barrel or higher was acceptable, adding that the producer group sought prices that were fair to consumers and producers alike. Brent oil is currently near $65.
The Organization of the Petroleum Exporting Countries and allied producers led by Russia agreed earlier this month to prolong oil output cuts, seeking to prop up the price of crude as the global economy weakens and U.S. production soars.
Iraq hopes navigation in the Strait of Hormuz will remain open and uninterrupted, said Ghadhban, who was speaking on the sidelines of an energy conference in Baghdad.
“No fewer than 18 million barrels pass through the strait every day ... the region needs to remain stable,” he said.
Prime Minister Adel Abdul Mahdi said on Tuesday that any disruption to oil exports through the Strait of Hormuz would be a “major obstacle” for the economy of Iraq, which has few oil export outlets.
The Iraqi government was studying contingency plans to deal with possible disruption, including alternative routes for oil exports, Abdul Mahdi said.
A vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond, the Strait of Hormuz has been at the heart of regional tensions for decades.
Recent months have seen a bout of instability in the region, with six tankers attacked since May amid escalating tensions between Tehran and Washington.

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Strait of Hormuz

The Strait of Hormuz is a vital shipping route linking Middle East oil producers to markets in Asia, Europe, North America and beyond.


OPEC+ faces challenge from rivals’ rising output, says IEA

Updated 15 November 2019

OPEC+ faces challenge from rivals’ rising output, says IEA

  • Sluggish refinery activity in the first three quarters has caused crude oil demand to fall for first time in a decade

LONDON: OPEC and its allies face stiffening competition in 2020, the International Energy Agency said on Friday, adding urgency to the oil producer group’s policy meeting next month.

“The OPEC+ countries face a major challenge in 2020 as demand for their crude is expected to fall sharply,” the Paris-based agency said in a monthly report.

The IEA estimated non-OPEC supply growth would surge to
2.3 million barrels per day (bpd) next year compared with 1.8 million bpd in 2019, citing production from the US, Brazil, Norway and Guyana.

“The hefty supply cushion that is likely to build up during the first half of next year will offer cold comfort to OPEC+ ministers gathering in Vienna at the start of next month,” it added.

While US supply rose by 145,000 bpd in October, the IEA said, a slowdown in activity that started earlier this year looks set to continue as companies prioritize capital discipline.

Demand for crude oil from OPEC in 2020 will be 28.9 million bpd, the IEA forecast, 1 million bpd below the exporter club’s current production.

The recovery by Saudi Arabia from attacks on the country’s oil infrastructure contributed 1.4 million bpd to the global oil supply increase in October of 1.5 million bpd.

Saudi state oil company Aramco, the world’s most profitable firm, starts a share sale on Nov. 17 in an initial public offering that may raise between $20 billion and
$40 billion.

It was the IEA’s last monthly report before the Dec. 5-6 talks among OPEC states and partners led by Russia on whether to maintain supply curbs aimed at buoying prices and balancing the market.

The agency kept its assessments for growth in global oil demand in 2019 and 2020 at 1 million bpd and 1.2 million bpd respectively, but said its outlook might slightly underestimate the impact of tariffs from the US-China trade war.

The IEA said that if some or all tariffs were lifted in coming months, “world economic growth and oil demand growth would both rise significantly,” though the rebound may not be immediate.

Sluggish refinery activity in the first three quarters has caused crude oil demand to fall in 2019 for the first time since 2009, the IEA said, but refining is set to rebound sharply in the fourth quarter and in 2020.