Crude Prices to Rebound as Iraq Joins S/Arabia in Freezing Output

Crude Prices to Rebound as Iraq Joins S/Arabia in Freezing Output

The worst days in the global oil market may be truly over as Iraq, yesterday agreed to join Nigeria, Saudi Arabia and other countries to freeze crude production, which will tackle the glut in the market and drive prices upwards.

This is coming after plans to freeze output at the last Organisation of Petroleum Exporting Countries (OPEC) meeting with Russia met a dead end, prompting the Minister of State for Petroleum, Ibe Kachikwu, to express doubt over possible agreement from Iraq to cut production in the cartel’s meeting slated for next month.

For Nigeria, the impact can only be positive amidst the present economic recession exacerbated by incessant attacks on oil installations which has drastically slashed production by 700,000 barrels a day to about 1.56 million bpd.

However, Vanguard is reporting that the Prime Minister of Iraq, Haider al-Abadi, has said they will support OPEC’s decision to freeze oil production in order to prop up the downturn of crude price in the international market.

“We would freeze production at the OPEC meeting, provided Iraq will support the group’s agreement,” he said.

Meanwhile, the oil market expanded yesterday, supported by production suspensions in the US Gulf due to an expected tropical storm and speculation that producers meeting in Algeria next month will yield a deal on production levels to support prices.

But the rise may not be rapid as Shell’s Chief, Energy Adviser, Wim Thomas, has said that the huge global oil oversupply that has weighed on prices for the past two years may not clear until the second half of 2017.