OPEC’s second largest producer has thrown its weight behind an oil output freeze.
Iraqi oil minister Jabbar Al-Luiebi said his country is willing to freeze production — or even cut it — if a consensus emerges at a meeting of major oil producers that starts Wednesday in Algiers.
“If the freeze is going to have a positive impact on prices, then we agree with the freeze,” Al-Luiebi told CNNMoney on Tuesday. “I am optimistic.”
Yet it’s not clear that a deal, long sought by some OPEC producers, is within reach. Both Iran and Saudi Arabia have said that the meeting is merely “consultative.”
The idea is that an output cap will help put a floor under prices, which have risen from $26 per barrel in February to $45 but are still down more than 50% since 2014.
Critics say any freeze would be mostly symbolic — OPEC is pumping more oil than ever before, and freezing production at extremely high levels wouldn’t really help fix an oversupplied market.
Oil prices have bounced before on hopes of a freeze, only for them to be dashed when talks collapsed.
The lack of cooperation in the face of a two-year price collapse reflects a schism within OPEC between its biggest member — Saudi Arabia — and Iran, which has doomed previous efforts to freeze production.
Iran is committed to increasing its output to 4 million barrels per day after years of international sanctions, and its representative in Algiers has indicated a deal is not likely to be struck this week.
“The informal OPEC meeting … is aimed by the participants as a consultative gathering and should not be expected to be anything more than that,” Iranian oil minister Bijan Zangeneh told state media on Monday.
Any agreement to restrain output would also have to address the prospect of increased production from Nigeria and Libya, which have both suffered disruptions due to conflict.
Al-Luiebi suggested that Iran, Libya and Nigeria could be given a reprieve of three to six months as part of a deal. That could give them time to ramp up production, while also satisfying other key players.
“You know damn well that oil is politics,” Al-Luiebi said. “It’s a game of politics.”
