Even more cracks may be forming within OPEC, even as market pundits continue to analyze
Qatar’s decision two days ago to withdraw from the oil producing cartel. Michael Cohen, head of energy markets research at Barclays bank,
told CNBC on Tuesday that Iraq, OPEC’s second largest producer, could be the next member to withdraw from OPEC.
“I think in terms of all the OPEC countries, to me the one that stands out over the last six to eight months is Iraq,” he said. “Iraq has been out of line with its target frequently... so if restrictions to cut were too stringent, Iraq might feel it in its best interest to no longer be a member of the organization.”
Last month, Iraq’s oil exports dropped to their lowest level in seven months due to bad weather at its southern ports. According to a statement from Iraq’s oil ministry, and reported by global commodities data provider
S&P Global Platts, Iraq’s federal exports in November averaged 3.372 million bpd, the lowest level since April this year.
Impending oil output cuts
Additionally, Cohen is referring to recent remarks by Saudi Arabia that it could cut output to put support under global oil prices that have tumbled around 30 percent from multi-year highs in early October. Growing concerns over an impending supply overhang in global oil markets is making the de facto OPEC leader nervous and comes amid a record setting oil production level in Saudi Arabia of 11 million bpd, in addition to Russian production over 11 million bpd in both October and November. U.S. oil output also set record levels of nearly 11.5 million bpd. Soaring production from the top three oil producing heavy weights come as economic problems grip emerging markets and as a projected slowdown in economic growth is projected amid trade tensions between Washington and Beijing.
Related: Is This The Next Disaster For Canadian Drillers?
In the last few days, global oil prices have seen some support on hopes that the U.S. and China can reach a trade deal
within the next 90 days. However, if no trade deal is agreed upon, and President Trump increases tariffs on Chinese goods from 10 percent to 25 percent, as well as placing another $267 worth of Chinese goods on the tariff list, global economic growth and oil demand will come under tremendous pressure, a possible scenario obviously not lost on Saudi Arabia.
There has been a history of disagreement between OPEC and Iraq
dating back to the at least the end of the Second Gulf War in 2003 as the country’s post war oil production remained crippled. Iraq saw its oil production drop from a pre-war level of 3.5 million bpd to only around 900,000 bpd by the end of the war.
Since then, Iraq has maintained an on again and off again willingness to comply with OPEC, particularly over oil production cuts. The last time a Saudi-led OPEC needed to trim production amid plunging oil prices and an oil supply glut in late 2016, Iraq waffled, stalled, bluffed then finally conceded and complied. Iraq's oil minister, Jabar Ali al-Luaibi,
at the same time OPEC was considering cuts actually urged oil and natural gas producers operating in the country to continue increasing output for the rest of the year and in 2017.
Iraqi oil production plans
Last month, as global oil prices were plunging amid over fresh supply concerns, Iraqi oil minister
Thamer Ghadhban said Iraq planned to increase its oil output and export capacity in 2019, with a focus on its southern oilfields, and is close to reaching a deal with international companies.
Moreover, five days ago Bloomberg reported that the biggest snag in OPEC’s push for a consensus on cutting oil output could come from relentless growth in supply from its second-biggest producer, Iraq.
Iraq is targeting production capacity of 5 million bpd in 2019, with average exports expected to reach around 3.8 million bpd. According to a report from energy consultancy Wood Mackenzie, Iraqi oil production has increased by around 6 percent this year, while its output could reach as much as 6 million bpd by 2025. By Tim Daiss for Oilprice.com
Iran: Suicide attack hits police post in Chabahar
3 hours ago
Official says more than 40 people also wounded in the attack that targeted a police headquarters in key port city.
Four policemen were killed and 42 other people were wounded in a suicide car bomb attack on a police headquarters in Iran's southeast on Thursday.
The attack occurred in Iran's southern port city of Chabahar, state television Press TV reported, quoting security and local officials.
State media also reported shooting in the area, home to a Sunni Muslim minority in the largely Shia country, which has long been plagued by violence from both drug smugglers and separatists.
Rahmdel Bameri, governor of Sistan-Baluchestan province, said a bomb-filled vehicle was used to target the police station by the suicide attacker.
"Police stopped the explosive-laden car and started firing at the driver ... who then set off the explosion near the police headquarters in Chabahar," said Bameri.
Images posted online showed thick smoke rising from the sky in the area where the attack took place.
The SITE Intelligence Group reported that Sunni armed group Ansar al-Furqan claimed responsibility for the attack.
Iran's Foreign Minister Javad Zarif accused a foreign power of involvement without naming a specific country.
"Foreign-backed terrorists kill and wound innocents in Chabahar. As we've made clear in the past, such crimes won’t go unpunished," Zarif
said on Twitter.
Tehran has accused its regional rival Saudi Arabia and the United States of funding armed groups, a charge Riyadh and Washington deny.
Suicide bombings are rare in
Iran, but armed groups have carried out several attacks on Iranian security forces in the Sistan-Baluchestan province in recent years.
Iran has stepped up security in border areas after gunmen in September opened fire on a military parade in Iran's southwestern city of Ahvaz, killing 25 people, almost half members of Iran's elite Islamic Revolutionary Guards Corps.
The southeastern port city in Iran's Sistan-Baluchestan province is located near the border with Pakistan. The city hosts the operation of a
joint port project between Iran and India by the Gulf of Oman.
Chabahar Port, which is being developed with funding from India, has been described as India's "golden gateway" that will help boost trade links to land-locked Afghanistan and Central Asia, while bypassing its regional rival, Pakistan.
The Indian foreign ministry condemned Thursday's "despicable terrorist attack".
"The perpetrators behind this dastardly attack should be brought to justice expeditiously. There can be no justification for any act of terror,” the ministry said.
In December 2010,
at least 41 people were killed and 90 others were wounded following a suicide attack near a mosque in Chabahar.
Another coordinated assault by fighters from the Islamic State of Iraq and the Levant (ISIL) group on June 7, 2017, targeted the parliament in Tehran and the shrine of Ayatollah Ruhollah Khomeini, the leader of Iran's 1979 Islamic Revolution,
killing at least 18 people and wounding more than 50.
Authorities said officers managed to block the vehicle and started firing at the driver, who then detonated his explosives [Tasnim/AP]