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As Iraq Ramps Up Oil Production, Forecast for New OPEC Oil by 2022 Doubled by IEA

As Iraq Ramps Up Oil Production, Forecast for New OPEC Oil by 2022 Doubled by IEA
Can the OPEC oil deal be derailed by the production spree in U.S. oil – this is the question that many analysts and experts are raising at the moment given the recently released data about U.S. oil and shale gas production.
And the International Energy Agency said that led by expansion efforts in oil production in Iran and Iraq, OPEC will most likely increase its production capacity by about twice as much as previously thought.
The IEA said that with a third of the gains in production believed to be concentrated in Iraq, the Organization of Petroleum Exporting Countries will raise output capacity by 1.95 million barrels a day from 2016 to 2022. A total growth of 800,000 barrels a day from 2015 to 2021 was predicted last year by the Paris-based agency.
The OPEC is getting ready to meet rising demand in coming years even as the organization of oil some producing countries is leading an effort by global producers to clear a glut this year by reducing output. While Iran is seeking foreign investors in its oil production sector after the lifting of nuclear-related sanctions, its neighbour Iraq is rehabilitating its oil industry after years of conflict.
“The group is building capacity even as it reduces in 2017, in anticipation of higher demand,” said the IEA, which advises most of the world’s biggest economies on energy policy. “Capacity growth is concentrated in the low-cost Middle East, with Iraq leading the gains.”
According to the IEA, which last year saw Iraq hitting 4.6 million by 2021, this year by the addition of about 700,000 barrels a day to reach 5.4 million a day in 2022, the nation will retain its position as OPEC’s second-biggest producer. Oil fields in the south of the country, such as the Majnoon project operated by Royal Dutch Shell Plc. will account for most of the increase in the country’s oil production.
According to the agency, which said the forecast hinges on whether the accord to lift international sanctions against Iran remains in place, Iran will expand capacity by 400,000 barrels a day to reach 4.15 million in 2022. This oil producing country has introduced a new contract model to attract foreign investors having been released last year from trade restrictions.
It’s unclear whether there’ll be enough demand to immediately absorb extra crude from OPEC with supplies from outside OPEC also projected to rebound sharply next year.
Roughly in line with the amount it pumped before cutting production, demand for the group’s output will be at 33 million barrels a day in 2018. The IEA’s data point to considerable excess capacity next year even if Saudi Arabia, OPEC’s biggest member, continues its policy of holding back some output for emergency use.
The agency said that “it is difficult to imagine a return to the unbridled production that sent prices crashing to their lowest in more than a decade” while talking about whether or not the group chooses to prolong the current agreement on output limits.

Christopher J. Mitchell

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