Oil in Global Economy Series: Iraq supports Saudi-Russia deal extension

After the Russian oil minister Alexander Novak and the Saudi Arabia’s oil minister Khalid-al-Falih signaled an agreement last week between the two biggest oil producers in the world to extend the current the supply deal, which is aimed at removing 1.8 million barrels worth of supplies, Iraq has joined the initiative before the much anticipated OPEC ministers’ meeting in Vienna headquarter on 25th of May. The agreement suggests no change in the targets but an extension of the deal till March 2018.

After a meeting with Mr. Khalid al-Falih in Baghdad, Iraqi oil minister Jabar Ali al-Luaibi said he supports the Saudi-Russia joint proposal to support the deal extension of another 9 months. It was important for both Saudi Arabia and Russia to have the second biggest oil producer and deal-skeptic Iraq into the camp before the 25th meeting as some members are reportedly worried about the lengths of the curbs. While Mr. Falih suggested no final decision before the Thursday meeting, it looks increasingly likely that an extension to the deal would be approved.

Iraq has been a skeptic of the deal for quite some time and at times threatened to extend production to as much as 5 million barrels per day arguing that it could have been achieved a long time ago, if not for the civil war within. Iraq had also reportedly asked for an exemption from the deal back in last November when it was struck.

Oil price remains upbeat heading into the meeting. WTI is currently trading at $50.9 per barrel and Brent at $2.7 per barrel premium o WTI.