Azernews.Az

By Kamila Aliyeva

World oil prices headed for the top on Tuesday as investors recouped the comments of the Iraqi oil minister about the intention of a number of oil-producing countries to increase production cut by another 1 percent, RIA Novosti reported.

As of 13.58 Moscow time, the November futures price for the North Sea oil blend of Brent rose by 0.67 percent to $55.85 per barrel. The cost of November futures for WTI crude oil rose by 0.89 percent to $50.80 per barrel.

Oil Minister Jabbar al-Luaibi told reporters that Iraq and some other oil-producing countries believe that it is necessary to reduce the extraction of "black gold" within the framework of the OPEC + agreement by about 1 percent while others are considering options of deal’s prolongation, Bloomberg reported.

“Some think that cuts should be extended beyond March, three or four months, or six months, or maybe till the end of 2018. Some, like Ecuador and other countries, even Iraq, think there should be another cut of 1 percent,” al-Luaibi said.

Crude prices jumped in May after OPEC and other major exporters extended their current deal to limit oil production for nine months, but later continued to decline as investors were anticipating deeper cuts.

Most recently, world’s largest oil-producers - Russia and Saudi Arabia - discussed the possibility of extending for a second time the oil output-cut deal between OPEC and non-OPEC producers negotiated in November 2016.

“OPEC deal will have to be extended since stocks have still not drawn down significantly, prices have not recovered much, and the market is still predicted to be in surplus in 2018,” Robin Mills, a Non-Resident Fellow for Energy at the Brookings Doha Center, and CEO of Qamar Energy (Dubai), told Azernews.

If the deal is not extended, the surplus will be considerably worse and prices will fall significantly, the expert believes.

“However, it will be difficult to agree on deeper cuts due to the conflicting interests of the various members,” he added.

OPEC and other major oil producers such as Russia, Azerbaijan, Bahrain, Brunei, Equatorial Guinea, Kazakhstan, Malaysia, Mexico, Oman, Sudan, and South Sudan reached an agreement in December 2016 to remove 1.8 million barrels a day from the market.

The deal to curb output brought crude prices above $58 a barrel in January but they have since slipped back as the effort to drain global inventories and stabilize the oil market has taken longer than expected.

OPEC and its partners decided to extend its production cuts till March 2018 in Vienna on May 25, as the oil cartel and its allies step up their attempt to end a three-year supply glut that has savaged crude prices and the global energy industry.

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Kamila Aliyeva is AzerNews’ staff journalist, follow her on Twitter: @Kami_Aliyeva

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