Iraq: OPEC in "Price War"

Iraq: OPEC in "Price War"Iraq: OPEC in "Price War"

Members of the Organization of Petroleum Exporting Countries (OPEC), a group that supplies 40 percent of the world’s oil, are engaged in an internal price war as they seek to preserve their share of an oversupplied market, Iraqi Oil Minister Adel Abdul Mahdi said.

“There is a price war within OPEC,” Fuel Fix quoted Mahdi as saying in an evening session of the parliament in Baghdad.

“The market’s fundamentals have changed, with an extra 3 million barrels a day of crude entering the market at a time when growth in China and India has slowed.”

Crude prices have collapsed more than 20 percent from their June peak, meeting a common definition of a bear market. Global supplies are rising as a shale boom spurs US production to the highest level in 30 years and demand grows at the slowest pace since 2009. Saudi Arabia, the world’s top oil exporter, cut the price of its main crude export grade to Asia to the lowest in almost six years on Oct. 1, a move later matched by Iran.

“Saudi Arabia last month lowered its selling price by 75 cents on average as part of this price war, Iran has done something similar and we, in Iraq, lowered our price by 60 cents,” Abdul Mahdi noted.

The Saudis will announce official selling prices for December next week. Asian traders are split on whether the kingdom will deepen the crude price cuts that propelled oil into a bear market.

The OPEC members boosted production to a 14-month high of 30.974 million barrels a day in October led by Iraq, Saudi Arabia and Libya, according to a Bloomberg survey.

Brent crude, the international benchmark, is headed for a sixth weekly loss, the longest losing streak since 2002. Both Brent and West Texas Intermediate, the US benchmark, are on track for their biggest monthly decline in more than two years. Brent crude fell from $115.71 a barrel on June 19 to $82.60 a barrel on Oct. 16, the lowest price in almost four years.

The matter will be discussed at the OPEC meeting next month, Abdul Mahdi said adding that: "We hope to get an agreement on all issues.”