Opec's Production Dilemma: Iraq's Perspective

Strategic Insights -

Iraq's former UN ambassador and member of the Iraqi delegation to the Opec meeting, Abdul Amir al-Anbari, expressed concerns about Opec's potential response to high oil prices. If prices remain above $28/bl for over 20 consecutive days, he suggested that Opec should not increase production. Al-Anbari emphasized the need for the price band mechanism to be maintained, but acknowledged that it requires improvement due to Iraq's limited production capacity caused by a lack of spare parts and raw materials, which are often vetoed or put on hold by the US.

Key Takeaways:

  • Abdul Amir al-Anbari, Iraq's former UN ambassador, believes that Opec should not increase production if oil prices remain above $28/bl for over 20 consecutive days.
  • Al-Anbari suggests that high prices are often due to futures speculation or lack of refinery capacity, rather than a lack of supply.
  • The price band mechanism should be maintained, but requires improvement, in the interests of all parties involved.
  • Iraq's production capacity is limited due to a lack of spare parts and raw materials, which are often vetoed or put on hold by the US.
  • The US voting pattern in the UN sanctions committee, where they often select one or two contracts and put them on hold or veto them, affects Iraq's ability to increase production.
  • Al-Anbari predicts that the world will face a production capacity deadlock within a year or two, and that only Iraq can meet the need to increase production.

Statistics:

  • Oil prices above $28/bl for over 20 consecutive days could lead to Opec not increasing production.
  • Iraq's production capacity is limited due to a lack of spare parts and raw materials.
  • The US has vetoed or put on hold several contracts for spare parts and raw materials, affecting Iraq's ability to increase production.
  • Al-Anbari predicts that the world will face a production capacity deadlock within a year or two.
  • Iraq is the only country that can meet the need to increase production.

Sources:

  • Argus, interview with Abdul Amir al-Anbari, no date or publication date mentioned.