29 May 2010 – The Guardian
An OPEC quota of 6 million barrels per day (bpd) will be too low for Iraq and it expects its quota to be no less than that of OPEC’s most influential member Saudi Arabia, Iraq’s oil minister said on Thursday.
Top oil producer Saudi Arabia’s OPEC quota is just over 8 million bpd. Iraq is the only one of OPEC’s 12 members that is exempt from quotas after years of sanctions and war.
Baghdad has signed deals to boost oil output capacity to a level rivalling Saudi Arabia, and tough negotiations are expected in the future on its reincorporation into OPEC quotas.
“Yes, we expect that Iraq’s quota would not be less than any other country in OPEC,” Iraq’s Oil Minister Hussain al-Shahristani told Reuters in an interview, when asked if he expected Baghdad to have a quota equal to Saudi.
“Of course we don’t think that 4 million barrels per day is an acceptable or reasonable quota for Iraq’s production,” he said, adding that a 6 million bpd quota would be too low.
Iraq strengthened its hands for any future negotiations when it agreed a series of deals that could boost its output capacity to around 12 million bpd in seven years from 2.5 million bpd now.
The recent drop in oil prices was unrelated to market fundamentals of supply and demand but was connected to Europe’s financial crisis, Shahristani said.
Oil prices traded near $73 a barrel on Thursday, close to the bottom of the $70 to $80 range that many in OPEC have said is fair for both producers and consumers. The price dropped below $70 this week, which was too low to encourage investment in future projects to boost capacity, Shahristani said.
“What we noticed over the past days is volatility in the market — that doesn’t need any interference by OPEC in the time being,” he said.
OPEC would continue to monitor oil price volatility to see if prices developed a downward trend before taking any action, Shahristani said.
“I think the oil market will correct itself and the prices will go back to what they were two or three weeks ago … unless the crisis became worse in Europe,” he said.
OPEC has left its output ceiling unchanged for more than a year since announcing a record supply curb of 4.2 million bpd in December 2008 to combat the global economic downturn.
Shahristani said he expected no change in OPEC output levels in October when the group next meets to discuss supply policy, if oil prices, supply and demand remained at current levels. “In general, I don’t think that there will be big changes in the global oil market production or consumption or even in price levels that would need OPEC to take new decisions,” he said. “I expect that OPEC would continue with current production levels.”