Iraq Is Playing Ball
April 3, 2017
Dennis Gartman is editor and publisher of The Gartman Letter, and strategic advisor of the AdvisorShares Gartman Currency Hedged Gold ETFs (GEUR & GYEN). He regularly contributes to AlphaBaskets and lends his institutional insight to educate advisors and investors about commodities and the forex markets, including about trading gold in different currency terms.
Crude oil prices are strong this morning and the “big” news over the weekend is from Iraq where the Sec’y General of OPEC, Mr. Mohammed Barkindo, was visiting and following his meetings there said that Iraq has assured him that it will adhere to the quotas put upon it at the November OPEC meeting last year. Iraq’s Oil Minister, Mr. Jabar al-Luaibi, said that Iraq was complying with the quotas at the 98% level. Speaking after the meeting, Mr. al-Luaibi said that the current production quota agreement “Contains many positive elements and achieves a lot of targets; work is on-going to reach the reduction of 1.8 million barrel/day agreed upon.”
What is important here is that Mr. al-Luaibi made no mention of extending the current production agreement into the second half of this year. He said, simply, that Iraq was adhering to the current production quotas and nothing more. However, ominously, Mr. al-Luaibi said that it was Iraq’s intention to increase production to 5.0 million bpd by this year’s end. This compares to the approximately 4.7 million bpd that Iraq is producing now. We cannot imagine that Iraq will increase production of crude oil and not wish to sell it. Further for the record, at its worst in the past four years, Iraq produced 2.825 million bpd back in September of ’13. Its next “low” was 3.325 million bpd in June of ’14. Its next “low” was 3.475 in January of ’15 and its last “low” was 4.225 million in February of last year. There is a trend here. Mr. al-Luaibi knows this all-too-well.