Oil Edges Lower as Iraq’s Mixed Messages Put Spotlight on OPEC

Oil edged lower as traders looked ahead to an OPEC meeting on supply policy, with Iraq giving out mixed messages about its stance.

Bloomberg
First Published13 May 2024
Oil Edges Lower as Iraq’s Mixed Messages Put Spotlight on OPEC
Oil Edges Lower as Iraq’s Mixed Messages Put Spotlight on OPEC

(Bloomberg) -- Oil edged lower as traders looked ahead to an OPEC meeting on supply policy, with Iraq giving out mixed messages about its stance.

Brent traded below $83 a barrel after losing 1.3% on Friday, which pushed futures to a second weekly decline. West Texas Intermediate was near $78. Iraqi Oil Minister Hayyan Abdul Ghani initially said at the weekend that Baghdad has cut production enough and won’t agree to more. But later, he said any decision was a matter for OPEC, and the country would stick to what the group decides.

“The Iraq comments are a storm in a teacup,” said Vandana Hari, founder of Vanda Insights. They were likely “misspoken, or misunderstood the first time round, which is why we saw the clarifications follow quickly,” she said.

Crude has been on a downward trajectory since mid-April, with prices giving up most of the geopolitical risk premium triggered by tensions in the Middle East, while they’ve also been pressured by a mixed demand outlook. Chinese producer-price inflation extended a long decline that highlighted weak consumption in the world’s biggest oil importer.

OPEC is due to deliver its global market outlook on Tuesday, offering clues on its assessment of global balances, the outlook for demand, as well as supply dynamics. Its policy meeting on output quotas will be held on June 1. The International Energy Agency’s latest report, meanwhile, is also due this week.

Iraq, the second-biggest producer among OPEC members, has been the source of some unease in the group as it’s failed to fully implement existing reductions. Still, most market watchers expect the wider OPEC group will extend curbs into the second half, even as some members’ spare capacity expands.

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