OPEC will be more difficult to ignore the main violator of the transaction (1)
The second-largest oil producer in OPEC and in combination is the most important conditions of its agreements the infringer.
If this continues, and further reduce the likelihood that the organization will be able to squeeze out a lot more production cuts in terms of prices.
In the first quarter of Iraq was producing about 80 million barrels per day more than the quota approved by the Organization of Petroleum Exporting Countries. If the transaction is about the limitation of production will be continued in 2018, Iraq will be even less incentive to comply with its conditions, because the capacity of key fields in the south are growing, and the country is drowning in debt in three years of struggle with the Islamic state.
"Simple of production capacity may result in losses for Iraq, which he may not want to incur", - predicts the chief strategist at BNP Paribas SA for commodity markets in London Harry Chilingiryan. Nevertheless, he believes that by the end of the year on the world market oil reserves will be reduced, since these OPEC members such as Saudi Arabia, compensate for violation of the terms of the transaction on the part of Iraq.
"Many market participants are not impressed with the effect of the agreement"- he said in an interview in Dubai, an oil analyst at Morgan Stanley Martyayn RATS. He predicted that the OPEC countries are likely to adhere to the agreement at Brent in the range of $ 50-60, and non-compliance risks grow if prices fall below or above this range.
Terms of the deal November suggested that OPEC will cut production by 1.2 million barrels per day, Iraq and reduce it to 210 thousand barrels per day to 4.351 million barrels per day. In the first quarter of Iraq has met only 61 per cent of liabilities, while in April this figure increased to 90 percent, OPEC data show. Iraq is not the only member of OPEC, is behind schedule: the United Arab Emirates in the first quarter implement a plan to reduce production by only 57 percent. Unable to reach the target and many independent exporters, including Russia.
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