A day after OPEC reached a deal to cut oil production, cracks are showing in the accord’s foundations, The Wall Street Journal reports.
Cartel member Nigeria is planning to boost, not cut, output. Libya is in the middle of reviving its exports. And a resurgent Iraq is disputing the output numbers underpinning the agreement.
Members of the Organization for the Petroleum Exporting Countries spent six hours in an Algiers conference center Wednesday night hashing out a proposal to raise oil prices by cutting production. They emerged with a tentative plan that boosted oil markets but provided only broad-brush strokes for a production cut. It says OPEC will limit output to between 32.5 million barrels a day and 33 million barrels a day, down from 33.2 million barrels a day in August.
The plan doesn’t say how much each individual country will have to cut. And it won’t be completed until November, giving plenty of time for it to fall apart.
In recent months, resurgent Iranian and Libyan output seemed likely to be OPEC’s biggest challenge in reaching a deal.
But it was Iraq that almost blocked the agreement Wednesday by objecting to the oil-production data OPEC generally uses to determine how much each country can produce, people familiar with the matter tell The Wall Street Journal. Iraq says the information, which is compiled by independent analysts, underreports Iraq’s actual output. Relying on that data, Iraqi Oil Minister Jabbar al-Luaibi argues, could lead to Iraq getting a smaller share of the group’s production.
Mr. Luaibi only got on board when OPEC’s secretary-general offered to set up a committee to assess each members’ production, but he still threatened to walk out of the group’s next meeting in November if the numbers weren’t to his liking, the people say.
“I had to look after the interests of my country,” Mr. al-Luaibi says in an interview today, noting that the difference in production figures “is wide.”
