OPEC production cut to spare Iraqi budget US$14 bn: PM adviser
OPEC organization. File photo.
The decision by the Organization of the Petroleum Exporting Countries to cut production from January by nearly 1.2 million barrels per day (3%) to 32.5 million barrels will nourish Iraq’s local economy and reduce the need for domestic and foreign loans, according to Mazhar Mohamed Saleh.
After initial reluctance citing impact from war against terrorism on its economy, Iraq agreed with OPEC last week to reduce its oil production by 200.000 bpd.
Saleh told Almada Press that the decision will have a positive effect on the Iraqi economy through reducing the budget deficit. “One dollar added to oil prices yields an additional annual revenue worth one billion dollars, besides,” he said. “That’s beside halting spending on investments in new oil wells in light of commitment to the OPEC-prescribed production share, which means saving at least 3-4 billion dollars from the investment plan in the 2017 budget.”
The deficit in the proposed Iraq’s 100-trillion-dinar budget for 2017 stands at more than 21 trillion dinars.
The OPEC deal, the first since 2008, goes into force starting January and lasts for six months. OPEC will meet with non-member producers this week in Vienna to reach a final deal on production cut.
World petroleum rates had fallen down by more than 60 percent since 2014, to the dismay of oil-reliant economies, including Iraq, OPEC’s second biggest producer.