Iraq: Everybody Needs the Oil Freeze

SOMO director general pushes for the freeze in the wake of Iraq posting near-record output.

Iraq, which posted near-record oil exports last month, now believes the highly touted – and criticized – output freeze proposed by Organization of the Petroleum Exporting Countries members and non-members is something "everybody" needs.

Falah Alamri, director general of SOMO, the state oil marketing company of Iraq, said the biggest producer nations must agree in Doha on April 17 to freeze production:  "They should do this deal as this is the only way to support the oil price.

"Everybody needs it and Iraq supports this deal."

Speaking ahead of his panel at the FT Commodities Global Summit in Lausanne, Alamri went on to note that "Demand is increasing and supply is decreasing as American shale oil especially is falling.

"The timing is right; a deal would now be effective."

As for Iran's repeated pledge to sit at the Doha table but not cut its own output, the director general said that while "the details are still up for debate," the Islamic Reepublic has the "right" to pursue its goal of boosting production to pre-sanction levels.

Iraq's stance may strike some observers as curious, given that the nation's output of 4.6 million barrels per day (bpd) makes it one of the more notable sources of production growth over the past two years.

It also flies in the face of the argument that even if consensus is reached at the Doha meeting it would do nothing to rebalance the market and may even be a "bearish catalyst for oil prices," according to Goldman Sachs.

Iraq's 2016 budget called for oil exports of 3.6 million bpd and an oil price of $45 per barrel, with 550,000 bpd exported from northern Iraq, 250,000 bpd from Kurdistan, and 300,000 bpd from Iraq's North Oil Company.