Iraq agrees to cut oil output, but remains short of target

Iraq has announced it will cut its oil output by around 700,000 barrels per day (bpd), a third less than required under an OPEC+ supply pact, after it failed to persuade international oil majors operating its giant fields to agree to deeper reductions, Reuters reports.

Iraq has agreed operators of its five giant southern oilfields to cut 300,000 bpd, Iraqi oil officials told Reuters on Wednesday. It will also lower production from other fields which it operates alone, bringing the total reductions to slightly below 700,000 bpd, they said.

Iraqi acting oil minister Ali Allawi said in a statement Iraq remained fully committed to the oil cut agreement reached by the Organization of the Petroleum Exporting Countries and its allies - a group known as OPEC+ - but did not elaborate.

The country’s oil output cut target under the OPEC+ supply reduction pact is 1.06 million bpd for May and June.

OPEC+ agreed last month to slash output by 9.7 million bpd for May and June, a record production cut.

The agreement with the oil majors came after what Iraqi officials described as “a defensive position” by the international oil companies developing Iraq’s southern fields.

The refusal by the oil majors to cut more oil indicates the difficulties which are facing Iraq to fully comply with the OPEC+ crude supply reduction pact.

Two senior Iraqi officials who are part of the talks with foreign companies said they had to agree this deal to avoid paying the companies for the curtailed production.

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