OPEC should consider members' economic, political conditions: Allawi
Says Iraq beginning to articulate this position as regards output cuts
Country has struggled to adhere to its quota this year
Dubai — Iraq, OPEC's second largest oil producer, has nearly reached its limit in accepting the OPEC model of "one size fits all" in terms of output cuts without taking into account members' economic and political conditions, the country's deputy prime minister said Nov. 23.
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Register Now"I think, as an Iraqi official, I would say that we have reached the limit of our ability and willingness to accept a policy of one size fits all. We are beginning to articulate that position," Ali Allawi told a virtual Iraq conference organized by Chatham House.
"We should not accept the one-size-fits-all-model that is being pursued now. I do not particularly think that it is correct to apply this, especially over a long period of time, [to] the OPEC cutbacks, without taking into account, the economic, social and demographic and political conditions."
Allawi said OPEC needs a "nuanced" model because not all countries have financial buffers such as sovereign wealth funds.
Iraq has struggled to adhere to its output quota this year amid the financial crisis gripping the country, the pandemic, and political mayhem sparked by demonstrations and change of government.
Quota busting
The country's oil production, including flows from the semi-autonomous Kurdish region, rose 6.7% in October from September, exceeding the country's OPEC+ quota, official data from State Oil Marketing Organization showed Nov. 5.
It pumped 3.842 million b/d in October, above September's 3.6 million b/d and its quota of 3.804 million b/d, according to SOMO figures.
Iraq, which overproduced May through July, is supposed to make 698,000 b/d of catch-up cuts from September through to December, divided into 203,000 b/d in September and 165,000 b/d in October, November and December.
Allawi said OPEC should also pay attention to talk of a potential UAE exit from the group and Libya's returning oil production. UAE is exploring options of staying in OPEC, sources familiar with the matter have said, as state producer Abu Dhabi National Oil Co. starts in January a $122 billion five-year capex plan that will help fund the development of oil discoveries and forges ahead with increasing its output capacity by about 25% to 5 million b/d by 2030.
Libya, which is exempt from OPEC+ cuts due to years of civil war, has boosted its production to close to 1.2 million b/d, its highest in almost a year, and an uptick in output of around 1 million b/d in just two months.
"The potential exit of the UAE from OPEC, [and] Libya's coming in up to 1.5 million b/d, I think all of those are...disruptive factors that need to be tackled by OPEC," Allawi, who is also finance minister, told the conference.
OPEC+ meeting
Libya's oil industry, which was battered by nearly a nine-month oil blockade imposed by the self-styled Libyan National Army, had seen its output fall to less than 100,000 b/d prior to the signing of a peace agreement between the LNA and rival UN-backed Government of National Accord in September.
OPEC and OPEC+ ministers are set to meet virtually Nov. 30-Dec 1, when they are expected to discuss the potential postponement of relaxing oil output cuts as lockdowns in several key oil consuming countries restrict demand, further putting pressure on a price stuck around the $40-$45/b range.
The 22-member alliance's supply accord calls for its 7.7 million b/d in production cuts to taper to 5.8 million b/d in January, but ministers have hinted that uncertainty over global oil demand levels could force them to postpone their scheduled hike in output.
A key monitoring committee led by Saudi Arabia and Russia met Nov. 17 without making any policy recommendations, delegates told S&P Global Platts, despite reviewing proposals to postpone the OPEC+ alliance's scheduled 2 million b/d easing of quotas by three or six months.
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Iraq reaching limit of accepting 'one-size-fits-all' OPEC model: deputy PM - S&P Global
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