Economy News – Baghdad
Oil production by the Organization of the Petroleum Exporting Countries (OPEC) experienced a decline in January, largely attributable to a fire incident occurring in Iraq’s largest oil fields.
Data indicates that OPEC produced slightly over 27 million barrels per day in January, reflecting a reduction of approximately 70,000 barrels per day from December. This decrease was primarily driven by disruptions in Iraq, despite minor increases in production from Kuwait and Venezuela.
The Iraqi government acted swiftly to extinguish a fire that erupted on January 24 in a storage tank at the Rumaila field. However, this incident resulted in a production setback of 300,000 barrels per day, accounting for 25% of the field’s overall capacity, in the subsequent week.
For January, Iraq’s average production was reported at over 4 million barrels per day, aligning with its allocation within OPEC.
Following Iraq, Kuwait reported noteworthy monthly production changes, with an increase of 60,000 barrels per day to reach 2.49 million barrels per day, while Venezuela raised its production by 50,000 barrels per day, averaging 900,000 barrels daily.
The OPEC+ alliance has announced plans to incrementally increase production by 120,000 barrels per day starting in April, with a cumulative target of restoring 2.1 million barrels per day by the end of 2026.
However, this planned increase has already faced three postponements, primarily due to concerns that injecting additional supply could destabilize the market, with key decisions needing to be finalized just one month prior to the proposed increase.
Currently, Iraq’s production is nearing the upper limit of its OPEC quota, a peak not seen since the allocation was set early last year. Nonetheless, Iraq has yet to implement further production cuts needed to rectify an earlier surplus—actions that Kazakhstan and Russia have committed to undertaking.
OPEC and its partners are continuing efforts to maintain their supply agreement until the end of the first quarter, enabling a gradual return of production through monthly increments. This strategy has been in place since late 2022, aiming to support the stability of oil prices in the market.
During a recent virtual meeting, the OPEC+ coalition, led by Saudi Arabia and Russia, reaffirmed its commitment to sustaining the existing production agreement. Notably, the coalition remains vigilant against oversaturating global markets with supply amidst declining demand from China, the world’s largest oil consumer, while alternative supplies from the Americas are on the rise.
