Iraqi experts shape oil markets after cuts

Shafaq News / The opinions of Iraqi oil experts differed between supporters and opponents of the move of OPEC and its allies in the group OPEC+ to reduce the oil cuts announced a few days ago to stabilize oil prices and increase them to suit producers and consumers alike.

Some saw the move as the beginning of stabilizing the oil market and raising prices again, while others saw it as a blow to oil prices for economies that are still fragile and in recession due to COVİD-19 pandemic.

"OPEC is currently reducing the reduction, some of which was voluntary by the Gulf States and Russia, which gave some stability in oil prices", oil expert Hamza al-Jawahiri told Shafaq News agency. Adding that, "All the indicators suggest that the countries -especially the industrial ones- will take a new direction regarding COVİD-19, as it will not stop their interests, the movement of people, goods, and others; this will increase the demand on crude oil between 10 and 12 million barrels per day (BPD), which will push the market to cautiously and slowly raise the prices”.

Al-Jawahiri considered, "Oil prices will reach 50 dollars a barrel or more by the end of this year if the surge in consumption becomes a result of the lifting of the embargo, particularly by industrial countries”.

"OPEC countries have a cell monitoring prices closely and continuously and study it and make the right decision, which will restore the market's balance and stability once again”.

In April, the OPEC+ group reached an agreement to make unprecedented oil production cuts of 9.7 million BPD to rebalance crude oil prices on global markets.

The agreement came after COVİD-19 caused prices to collapse and lose more than 50% of their value as large economic sectors around the world were halted.

However, the alliance recently decided to cut the reduction this month with signs of price recovery.

According to figures, OPEC production rose by 900,000 BPD in July to 23.43 million BPD. Russia, in turn, has announced an increase in its crude oil production.

Earlier On Tuesday, oil prices fell slightly as production increased coinciding with an increase in COVİD-19 infections; which raised doubts about a recovery in consumption. However, the prices were around 40 dollars per barrel since the beginning of the month.

The economist and oil analyst, Dhurgham Mohammed Ali said, "Current oil prices are fragile and subjected to the changes in the economic activity, which is already in recession due to COVİD-19 pandemic, as well as the adherence to the production cut agreement”.

"The announcement of Russia's increase in production is a blow to the agreement even if the excess quantities are not exported; as the volume of supply in the market is higher than demand, which raises the possibility that prices will fall again in light of the fragility of the OPEC+ agreement". Ali, head of the Center for Economic Information told The Shafaq News Agency, and added, "Oil prices are not likely to improve dramatically this year, as the recovery of global economies remains slow and uncertain as other waves of corona continue to be apprehended".

Under the OPEC+ agreement, Iraq had pledged to cut its production by about 1 million BPD.

Iraq's oil exports in July reached 2.763 million BPD, down from 2.816 million BPD in June.

Before Iraq began to cut production about three months ago; Iraqi exports ranged from 3.3 million to 3.5 million BPD.

Iraq is suffering from a financial crisis due to the oil prices collapse, whose revenues account for about 95% of the state budget, as government spending on the health sector increases to fight COVİD-19 as well as support the poor who have been affected by the prevention restrictions.

For his part, oil expert Hussein Taleb told Shafaq News agency that "the market is waiting for the results of the new OPEC+ step and its impact on supply, as well as the extent of the commitment to not increase exports and allocate increases for domestic consumption", pointing out that "prices will mostly continue its volatility during the coming period".

Taleb pointed out that, "OPEC+ has already recovered prices from the negative zone to relatively good levels; with international crude prices nearly three times the lows reached in late April, raising Brent crude futures to 43 dollars per barrel”, and confirms that "OPEC and its allies are credited with lifting oil from a historic drop -when prices hit below zero last April, but some see it as a risky time to add more supplies to the market”.