Aug. 11 (UPI) -- 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.