Saudi Arabia and Iraq pledge to rebalance the oil markets

Saudi Arabia and Iraq, Opec’s biggest oil producers agreed to work on rebalancing the oil markets as part of their pledge to cut back more than 9.7 million barrels per day in May and June.

The pledge by both sides followed the visit of Iraq’s deputy prime minister Ali Allawi, who is also the country’s finance minister and acting oil minister, according to the official Saudi Press Agency.

Riyadh and Baghdad expressed satisfaction at the progress of the cuts, which have helped to drain inventory levels as well as steady prices above $30 per barrel this month.

Opec's second-largest producer Iraq, which has in the past not adhered to slashing production in line with Opec+ agreements, pledged to cut 300,000 bpd bringing its total restrictions to just under 700,000 bpd earlier this month.

Opec+ is trimming output by 9.7m bpd in May and June and will keep drawing back supply until 2022. Opec's core Arab Gulf members are, in addition, cutting an extra 2m bpd more than their stipulated quotas.

Saudi Arabia, which leads the alliance with Russia, will also cut a further million bpd of supply from the markets in June, bringing its total output curbs to 4.8m bpd. Production for the month of June for the world's largest oil exporter is expected to average 7.492m bpd.

Kuwait will also cut an additional 80,000 bpd, while the UAE is committed to further reductions of 100,000 bpd.

Iraq's net revenue from oil meanwhile could fall by as much as 70 per cent this year, as a result of the slowdown in oil demand from the Covid-19 pandemic and supply restrictions in place to rebalance the oil markets, according to the International Energy Agency.

Separately, Saudi Arabia’s oil and gas companies would be allowed to invest in Iraq's western Akkas gas field in Anbar province, the country's largest, which borders Syria, Al Arabiya reported.

Source: thenational.ae

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