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Saudis ready to export more oil to Iraq
by Daniel J. Graeber
Washington (UPI) Aug 11, 2017

Saudi, Iraq vow stronger commitment to cut oil output
Riyadh (AFP) Aug 10, 2017 - OPEC's top two producers agreed Thursday to strengthen their commitment to production cuts, as the oil cartel reported a collective increase in output last month in a setback for its deal to pump less.

The pledge from Saudi Arabia and Iraq, the first and second largest OPEC producers, came after their oil ministers met in the Red Sea city of Jeddah.

Saudi Energy Minister Khalid al-Falih and his Iraqi counterpart Jabbar al-Luaybi also vowed to ensure coordination of their nations' oil policies, according to the Saudi Press Agency, as the Arab neighbours seek to upgrade strategic ties.

OPEC states and other oil producers agreed in November to cut output until March 2018, in its long-haul gambit to erode a world oil glut and boost prices.

But despite the commitment, crude production by OPEC members saw an uptick in July, including by Saudi Arabia which had championed efforts by the cartel and allied independent producers to extend an output freeze.

Output from the 14 cartel members hit 32.87 million barrels per day (mbd) last month, OPEC said in its monthly report on the oil market, up from 32.69 mbd in June.

The inability of some members to cut ouput has raised doubts about OPEC's capacity to enforce the November deal.

Saudi Arabia and Iraq have suffered huge economic pain because of sliding oil prices.

Luaybi's visit symbolises a growing rapprochement between Riyadh and Baghdad as the kingdom seeks to increase its influence in Iraqi politics and undercut the say of regional rival Iran.

The minister also met with Saudi Crown Prince Mohammed bin Salman in Jeddah to discuss "joint opportunities in the economic fields and energy in particular", SPA reported.

After discussions on compliance with an OPEC-led effort to balance the market, Saudi Arabia's energy minister said Iraq could be the target for more exports.

Saudi Arabia and Iraq are the top two oil producers among members of the Organization of Petroleum Exporting Countries. Saudi Arabia has taken a "whatever it takes" stance on a multilateral effort to balance an oversupplied market for crude oil with production declines, while Iraq is said to be the least compliant among parties to the arrangement.

Saudi Energy Minister Khalid al-Falih said his country was willing to "open all fields" in order to improve bilateral relations with its ally, Iraq.

"The minister said that the kingdom is keen to supply Iraq with Saudi exports of petroleum, petrochemical and mineral products from iron and aluminum, support the investments between the two countries, and increase trade exchange at all levels," a statement from the official Saudi Press Agency read.

Saudi officials hosted Iraqi Oil Minister Jabbar al-Luabi earlier this week to discuss recent trades in shared oil policy. The SPA reported that both sides restated their full commitment to the OPEC-led effort to trim production until the markets reach a target level that would indicate balance.

Vandana Hari, an industry analyst and founder of Vanda Insights, told UPI that it's natural for Saudi Arabia to address the energy needs of its Arab neighbors, but the devil is in the details when it comes to market share among OPEC producers.

"One way to compensate for the loss of crude market share would be to refine more domestic crude production at home and step up refined product exports, which are not on OPEC's radar," she said.

According to OPEC, commercial oil stocks for the developed countries in the Organization for Economic Cooperation and Development in June were still above the latest-five year average by about 252 million barrels. That comes even as commercial OECD stocks declined in the same month by 21.9 million barrels.

The International Energy Agency said Friday that, if OECD stocks fell by a half million barrels per day from now until the end of the first quarter 2018, when the OPEC agreement expires, stocks would still be well above the five-year average.

"There would be more confidence that re-balancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve," the IEA warned.

Secondary sources told OPEC economists that Iraq produced 4.4 million barrels of oil per day in July, a decline of 33,000 barrels per day from the previous month, but relatively on par with its average for the year. Saudi Arabia produced 10.06 million barrels per day, which at 31,800 above June levels, nearly offsets Iraq's decline.

U.S. shale player Sanchez boosted by second quarter acquisition
Washington (UPI) Aug 9, 2017
U.S. shale exploration and production company Sanchez Energy said its output increased more than 40 percent over the first quarter of the year. Sanchez is one of the larger operators in the Eagle Ford shale basin in Texas and added more than 300,000 acres to its portfolio through a March acquisition from rival shale player Anadarko Petroleum. With the assets entrenched in its por ... read more

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