Iraq, Kuwait Woes Muddle Opec's Plans

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Opec-plus has rebuffed growing pressure in recent months to bring additional volumes of oil to the market from consumer countries feeling the price pain. But the producer group is also battling to meet its existing monthly targets, even with around 5 million barrels per day of spare capacity. And it’s not just a few noncore stragglers in West Africa to blame. Serious questions are being asked about what Iraq and Kuwait, respectively Opec’s second- and fourth-largest producers, could realistically add next year if demand rebounds. Iraq’s production target is rising by 44,000 b/d each month, and Kuwait’s by 27,000 b/d. Both countries have also negotiated a 150,000 b/d upward revision to their baseline, on which production quotas are calculated, effective from May 2022. But constraints linked largely to the outdated Basrah export infrastructure have seen Iraq’s crude output trail its target since July — and actually dip in October — even though production remains around 600,000 b/d below its estimated capacity of 4.7 million b/d. Meanwhile, the state-run Kuwait Oil Co. (KOC), which produces all the country’s crude except for 50% of the Neutral Zone’s output, recently reported a capacity decline of 572,000 b/d over the past three financial years. Even if KOC avoids further capacity losses, barring a surge in Neutral Zone output, it appears Kuwait will hit its production limit sometime next year.

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