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Iraq: OPEC+ to Meet Demand with Daily Increase of 400,000 Barrels in Oil Output

Iraq says OPEC + daily increase of 400,000 barrels in oil output would be enough to meet demand - File Photo/Reuters
Iraq says OPEC + daily increase of 400,000 barrels in oil output would be enough to meet demand - File Photo/Reuters
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Iraq: OPEC+ to Meet Demand with Daily Increase of 400,000 Barrels in Oil Output

Iraq says OPEC + daily increase of 400,000 barrels in oil output would be enough to meet demand - File Photo/Reuters
Iraq says OPEC + daily increase of 400,000 barrels in oil output would be enough to meet demand - File Photo/Reuters

Iraq’s state oil marketing company, SOMO, said on Saturday Iraq sees no need to take any decision to increase its production capabilities beyond what has already been planned for OPEC countries.

In the light of increased demand for energy, Iraq sees the OPEC+ agreement raising its output by 400,000 barrels per day (bpd) a month, sufficient to meet demand and stabilize the market, SOMO added in a statement.

“Meanwhile Iraq seeks to increase gas production through increasing investment in gas fields,” SOMO added.

An OPEC+ committee largely stuck to forecasts of a strong demand rebound this year and next ahead of a meeting next week, at which the group is expected to rubber stamp a planned output increase of 400,000 barrels per day (bpd) in December.

The Joint Technical Committee (JTC), which met on Thursday, now expects oil demand to grow by 5.7 million bpd in 2021, 120,000 bpd below OPEC's forecast in its latest monthly report, two OPEC+ sources said, Reuters reported.

The JTC left its demand forecast for next year steady at 4.2 million bpd, one of the sources said.

OPEC+ forecasts are still higher than those of the International Energy Agency (IEA), which expects oil demand to grow by 5.5 million bpd in 2021 and 3.3 million bpd in 2022.

Ministers from the Organization of the Petroleum Exporting Countries (OPEC), Russia and their allies - collectively known as OPEC+ - meet on Nov. 4 to decide output policy.

This week Russian Deputy Prime Minister Alexander Novak told Reuters he expected OPEC+ to go ahead with its planned increase for December, as previously agreed.

"Demand (for oil) can decline as there is still uncertainty. We also see there is yet another pandemic wave spreading across the world," Novak said.

"The situation of the oil market indicates that the increase in December ... should not exceed 400,000 bpd," state news agency APS quoted Algerian Energy Minister Mohamed Arkab as saying on Thursday.

Oil prices were trading above $84 a barrel on Friday, within sight of a three-year high of $86.70 hit this week.

Saudi energy minister Prince Abdulaziz bin Salman twice dismissed calls this week by major consumer nations to speed the rate of OPEC+ production increases, saying the group does not expect crude oil shortages in the market.

"With OECD commercial oil inventories 5.4% below the five-year average and demand rapidly normalizing, OPEC+’s preference to keep production policy unchanged reflects an alliance that is significantly more tolerant of higher prices," JP Morgan said in a note.

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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
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IMF: Middle East Conflict Escalation Could Have Significant Economic Consequences

Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki
Displaced families, mainly from Syria, gather at Beirut's central Martyrs' Square, where they spent the night fleeing the overnight Israeli strikes in Beirut, Lebanon September 28, 2024. REUTERS/Louisa Gouliamaki

The International Monetary Fund said on Thursday that an escalation of the conflict in the Middle East could have significant economic ramifications for the region and the global economy, but commodity prices remain below the highs of the past year.

IMF spokesperson Julie Kozack told a regular news briefing that the Fund is closely monitoring the situation in southern Lebanon with "grave concern" and offered condolences for the loss of life.

"The potential for further escalation of the conflict heightens risks and uncertainty and could have significant economic ramifications for the region and beyond," Kozack said.

According to Reuters, she said it was too early to predict specific impacts on the global economy, but noted that economies in the region have already suffered greatly, especially in Gaza, where the civilian population "faces dire socioeconomic conditions, a humanitarian crisis and insufficient aid deliveries.

The IMF estimates that Gaza's GDP declined 86% in the first half of 2024, Kozack said, while the West Bank's first-half GDP likely declined 25%, with prospects of a further deterioration.

Israel's GDP contracted by about 20% in the fourth quarter of 2023 after the conflict began, and the country has seen only a partial recovery in the first half of 2024, she added.
The IMF will update its economic projections for all countries and the global economy later in October when the global lender and World Bank hold their fall meetings in Washington.
"In Lebanon, the recent intensification of the conflict is exacerbating the country's already fragile macroeconomic and social situation," Kozack said, referring to Israel's airstrikes on Hezbollah in Lebanon.
"The conflict has inflicted a heavy human toll on the country, and it has damaged physical infrastructure."
The main channels for the conflict to impact the global economy have been through higher commodity prices, including oil and grains, as well as increased shipping costs, as vessels avoid potential missile attacks by Yemen's Houthis on vessels in the Red Sea, Kozack said. But commodity prices are currently lower than their peaks in the past year.
"I just emphasize once again that we're closely monitoring the situation, and this is a situation of great concern and very high uncertainty," she added.
Lebanon in 2022 reached a staff-level agreement with the IMF on a potential loan program, but there has been insufficient progress on required reforms, Kozack said.
"We are prepared to engage with Lebanon on a possible financing program when the situation is appropriate to do so, but it would necessitate that the actions can be taken and decisive policy measures can be taken," Kozack added. "We are currently supporting Lebanon through capacity development assistance and other areas where possible."