Oil falls as Iraq resists OPEC output cut; Russian energy minister talks up deal

Oil prices fell on Monday as Iraq said it wanted to be exempt from an OPEC deal to cut production, though losses were capped by supportive comments from Russian and Iranian officials regarding plans to limit output.

Brent crude futures were down 49 cents, or 1 percent, at $51.29 a barrel by 11:05 a.m. ET (1505 GMT). U.S. West Texas Intermediate (WTI) crude fell 55 cents, or 1.1 percent, to $50.30.

Iraqi oil minister Jabar Ali al-Luaibi said Baghdad wants to be exempt from any production cut the Organization of the Petroleum Exporting Countries is aiming to achieve.

Falah al-Amiri, head of Iraqi state oil marketer SOMO, added that Iraq’s market share had been compromised by the wars it has fought since the 1980s.

“We should be producing 9 million (barrels per day) if it wasn’t for the wars,” he said.

OPEC announced plans last month to reduce its output to between 32.5 million barrels per day (bpd) and 33 million bpd, from September’s 33.39 million bpd. The group will iron out the details of how it will hit the target at its next meeting in Vienna on Nov. 30.

“A decision to cut to 33 million bpd should keep the crude price basis Brent in the $50-$60 band, not least because it shows that Saudi policy has changed, that OPEC is serious and can rise above political disagreements,” David Hufton, of consultancy PVM, said in a note.

Iraq said it could raise output slightly this month from September’s 4.774 million bpd.

Russian Energy Minister Alexander Novak told reporters on Monday that Russia considered oil output freeze to be an effective tool for stabilizing global oil markets.

After a meeting with OPEC Secretary-General Mohammed Barkindo, Novak said that they had discussed specific mechanisms of a possible deal between Russia and OPEC. Options other than output freeze were considered as well.

Oil supply was still higher than demand and there was a risk that it would grow further in winter as demand is traditionally lower during this period of a year, Novak said.

Novakalso told Russia’s Interfax news agency OPEC had invited other non-OPEC countries to attend its annual meeting on Nov. 30, according to Dow Jones.

Comments from Iran’s deputy oil minister Amir Hossein Zamaninia also helped to push prices higher earlier in the session. He said Tehran would encourage other OPEC members to join an output freeze, adding that $55-$60 a barrel is a fair price to bring stability to the market.

Analysts said that oil markets, which have been dogged by two years of oversupply, might be rebalancing in terms of production and consumption.

“The market moved into a small deficit in Q3, will remain so in Q4 and then the deficit will expand significantly in 2017,” Barclays bank said in a note to clients.