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Iraqi PM says curbing oil production in his country to escalate crude prices

business Updated: Nov 29, 2016 12:01 IST
Iraq oil

A flame rises from a chimney at Taq Taq oil field in Arbil, in Iraq's Kurdistan region.(Reuters file photo)

Iraq’s prime minister says his country will agree to cut its own oil production as part of a plan by OPEC to push crude prices higher.

Prime Minister Haider al-Abadi told The Associated Press that current prices are not sustainable for oil-producing countries.

Al-Abadi’s comments could be critical because Iraq — along with Iran — has been reluctant to go along with cuts, creating an obstacle for an OPEC deal, according to published reports.

Al-Abadi said he understands that OPEC members will agree to reduce production by between 900,000 and 1.2 million barrels per day — that would be a cut of between 2.7% and 3.6% from October levels. He said it would be enough to push prices up.

“Yes, we will take our share and we agreed to this,” he told the AP.

Benchmark international oil rose $1, or 2%, on Monday to close at $48.24 a barrel. Al-Abadi said for every dollar oil prices rise, Iraq gains about $1 billion.

In late 2014, as crude prices tumbled from more than $100 a barrel, OPEC countries decided not to intervene — they expected falling prices to drive high-cost producers in the US out of business.

But a worldwide glut of oil has persisted and OPEC has been pumping at record levels. Now the cartel is trying to regain some of its historical ability to affect prices.