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OPEC Authorizes Iraq to Increase Output to 4.5 Mln Bpd

OPEC Authorizes Iraq to Increase Output to 4.5 Mln Bpd

Sunday, 15 May, 2022 - 08:30
Oil tanks are seen at the gas field of Siba in Basra, Iraq April 25, 2018. (Reuters)

Iraq’s representative at OPEC said the organization had agreed to the country increasing its output to 4.5 million barrels of oil per day (bpd) starting from June, the state news agency (INA) reported on Saturday.

There will be further increases of 50,000 bpd in output in each of the months July, August and September, INA added, citing Muhammad Saadoun’s statements.

Iraq pumped 4.43 million barrels per day (bpd) of oil in April, 16,000 bpd above its OPEC+ quota for that month, according to data from state-owned marketer SOMO seen by Reuters on May 11.

Iraq’s March production was impacted by field outages in the south, pushing its output 222,000 bpd below the production ceiling for that month.

Like several other OPEC members, Iraq has struggled to pump more oil at a time of already tight global supply and soaring prices.

Almost half the global shortfall in planned oil supply by OPEC and its allies – a grouping known as OPEC+ – is down to Nigeria and Angola, due to several factors including the exit by Western oil majors from African projects.

OPEC+ produced 1.45 million barrels per day (bpd) below its production targets in March, as Russian output began to decline following sanctions imposed by the West, a report from the producer alliance seen by Reuters showed.

Russia produced about 300,000 bpd below its target in March at 10.018 million bpd, based on secondary sources, the report showed.

OPEC+ compliance with the production cuts rose to 157 percent in March, from 132 percent in February, the data showed, the highest since the group introduced record production cuts of about 10 million bpd in May 2020 to counter the impact of the pandemic on demand.

OPEC+ agreed last month to another modest monthly oil output boost of 432,000 bpd for May, resisting pressure by major consumers to pump more.

As the group unwinds production cuts, several producers, namely West African countries struggling with under-investment and an exodus of international energy companies, are failing to keep up.

At its meeting last month, OPEC+ also ditched the Paris-based IEA as one of its secondary sources, replacing it with consultancies Wood Mackenzie and Rystad Energy.

Oil prices rose about 4 percent on Friday as US gasoline prices jumped to a record high, China looked ready to ease pandemic restrictions and investors worried supplies will tighten if the European Union bans Russian oil.

Brent futures rose $4.10, or 3.8 percent, to settle at $111.55 a barrel. US West Texas Intermediate (WTI) crude rose $4.36, or 4.1 percent, to settle at $110.49.

US gasoline futures soared to an all-time high after stockpiles fell last week for a sixth straight week.

That boosted the gasoline crack spread - a measure of refining profit margins - to its highest since it hit a record in April 2020 when WTI finished in negative territory.

Oil prices have been volatile, supported by worries a possible EU ban on Russian oil could tighten supplies but pressured by fears that a resurgent COVID-19 pandemic could cut global demand.

This week, Moscow slapped sanctions on several European energy companies.

In China, authorities pledged to support the economy and city officials said Shanghai would start to ease coronavirus traffic restrictions and open shops this month.

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