Iraq plans to reduce its oil exports next month as part of OPEC‘s push for members to adhere to production targets, according to an official familiar with the matter.
The second-largest oil producer in OPEC intends to cut exports by about 100,000 barrels per day, bringing the total to 3.2 million barrels per day in May. The official, who spoke on condition of anonymity, said these figures have not been made public.
Last month, OPEC and its allies announced plans to gradually increase production that had been halted two years ago. However, they are pushing for better compliance from members who have exceeded their quotas in the past. Iraq, along with other members, faces pressure to make extra supply cuts to compensate for overproduction during the past year.
OPEC measures compliance based on oil production, not exports. According to OPEC figures, Iraq’s output in March was about 90,000 barrels per day above its target, while the International Energy Agency estimates it was over 300,000 barrels a day above its quota.
While Iraq’s decision to cut exports suggests a potential reduction in production, there is no guarantee the two will align. Iraq has previously pledged to meet its production targets but failed to follow through.
Iraq has long resisted OPEC’s output limits as it aims to rebuild its economy and strengthen trade relations after years of sanctions and conflict. The country needs oil prices to reach $92 a barrel to cover government spending this year, according to the International Monetary Fund. Currently, Brent crude is trading near $65 per barrel.
Data released by OPEC on Wednesday showed Iraq made some progress in addressing its compensation backlog, while Kazakhstan, another member, continued to exceed its production limits.
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