Oil Jumps 2% as Iraq Supports Output Cuts for Market Stability

By Adedapo Adesanya

Oil gained about 2 per cent on Friday as Iraq voiced support for output cuts ahead of a meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in two weeks.

Brent futures rose $1.42 or 1.8 per cent to settle at $81.43 a barrel, as the US West Texas Intermediate (WTI) crude increased by $1.43 or 1.9 per cent to trade at $77.17 per barrel.

Brent and WTI notched their third straight weekly losses for the first time since May as prices went down by 4 per cent.

Iraq, one of the founding and top members of OPEC, said in a statement on Friday that Baghdad was committed to the OPEC+ agreement on determining production levels, two weeks ahead of a key meeting of the producer group.

Iraqi Oil Minister, Mr Hayan Abdel-Ghani, on Tuesday, said that oil exports from southern fields increased by 350,000 barrels per day, without giving a timeframe.

About 450,000 barrels per day of exports from oil produced in northern Iraq have been shut in since late March amid a dispute with Turkey.

The statement from the ministry on Friday indicated that rising exports were “normal” and did not impact overall production ceilings agreed upon in the OPEC+ framework.

It added that “these fluctuations [in exports] sometimes happen due to falling domestic consumption and seasonality.”

The statement also indicated that OPEC+ “will not hesitate to take decisions that bring stability to the oil market.”

OPEC and its allies known as OPEC+ are set to meet in Vienna on November 26 to set their production policy.

In addition to Iraq’s comments, Saudi Arabia and Russia confirmed this week that they would continue oil output cuts through year-end.

In the US, energy firms cut the number of oil rigs operating for a second week in a row to the lowest since January 2022, energy services firm Baker Hughes said. The rig count points to future output.

Weak Chinese economic data this week increased worries about faltering demand as refiners in China, the largest buyer of crude from Saudi Arabia, the world’s largest exporter, asked for less supply for December.

Also pressuring prices, US consumer sentiment fell for a fourth straight month in November and households’ expectations for inflation rose again.