On Again Off Again Iraq Is On Again For An OPEC Production Freeze

Haidar Al-Abadi, prime minister for Iraq

Iraq this week contributed to the intrigue building up in advance the September freeze talks of Organization of the Petroleum Exporting Countries (OPEC) members by declaring it will support a cap in oil production.

Haidar Al-Abadi, prime minister for Iraq, said during a news conference, "Our opinion is to freeze output to support prices: the drop in oil prices is causing volatility and this is harming Iraq because our revenues are based on oil.

"We support freezing oil production by OPEC."

The statements fly in the face of the country's need for as much oil revenue as possible to fund its war against the Islamic State; they also confound many analysts' predictions that Iraq would be an impediment to the September talks, based on signs that it is determined to prevail in the international market.

Purely in terms of public statements, Iraq's intentions leading up to the OPEC summit are erratic at best: Al-Abadi was quoted by Reuters on August 23 as saying his country still hadn't raised production sufficiently, and he urged oil companies to boost output (he had previously instructed them to cut investment).

Just a day later, Fayyad Al-Nima, deputy oil minister for Iraq , said the country would support measures to establish fair crude prices.

But as the Wall Street Journal intimates, it doesn't really matter if Iraq's pledge to play ball is sincere or not, because "any deal negotiated in Algiers next month also would need the support of Saudi Arabia and Iran, long-time rivals with competing interests in the Middle East and in the oil market.

The Journal adds that "A host of analysts have said those two countries' opposing interests are likely to scuttle any deal, which would require a unanimous vote of OPEC members."

Meanwhile, an OPEC official told media that Persian Gulf countries, including Saudi Arabia, regard the impending summit as an opportunity to believe the impending summit is an opportunity to review the oil market and build trust among members, but that "a concrete action is likely to take more time."

A recent sign that Iraq is more interested in production growth than a cap is a report from Reuters that the country's State Oil Marketing Organization will consider selling its crude through Iran should impending talks with Turkey fall through.