ERBIL, Kurdistan Region - Iraq expects oil prices to remain around $70 per barrel as contradicting factors such as tariffs on importing countries and sanctions on exporting countries could restabilize supply and demand, thus keeping prices steady, its representative at OPEC said.
“Demand continues to grow, and may decline in some developed countries, but it is growing more rapidly in developing countries. Therefore, demand is secured for years or even decades to come,” Mohammed al-Najjar, Iraq’s representative at OPEC, told Rudaw in an interview on Sunday.
Najjar explained that global supply and demand is affected by geopolitical decisions such as the recent US tariffs on China, which is the largest crude oil buyer, and such decisions could reduce demand and drop prices. On the other hand, sanctions on oil producing countries such as Russia, Iran and Venezuela could also put restrictions on exports to world markets and kick prices back up.
“There are some leaks indicating the possibility of some quantities from the second voluntary cut being reinstated, as the last voluntary cut was fully reinstated and amounted to approximately 2.2 million barrels,” said Najjar, when asked about the possibility of OPEC members maintaining the current production ceiling.
OPEC sets oil production ceilings, and member states can fully export their production or retain a portion for domestic use. Voluntary cuts are sometimes suggested by OPEC so member states can voluntarily cut their exports to balance global demand and keep prices steady, while showing economic strength and control globally.
While voluntary cuts may help keep global prices steady, black market oil exports could also reduce demand for OPEC oil, and as such, affect markets negatively.
According to a recent US Department of the Treasury report, Iraq is being accused of smuggling Iranian oil through its territories to China and thus evading both US sanctions on Iran and tariffs on China. Iraq has categorically denied the accusations.
Reports of China importing oil from Venezuela through methods that evade US sanctions could also mean that China procures its demands for oil through the black market, undermining OPEC prices, which could in turn have a negative effect on global prices.
“We aim to increase production capacity, not actual production,” said Najjar, indicating that Baghdad is willing to invest in its production capacity, relying on the assumption that prices will remain steady. He stressed that Iraq will achieve a balance between its domestic consumption and exports globally.
The following is the full transcript of the interview with Mohammed al-Najjar:
Rudaw: Based on your position as Iraq's representative to OPEC, what are your expectations regarding oil prices?
Mohammed al-Najjar: Price forecasts depend on several factors, including, of course, market fundamentals such as supply and demand. There are also geopolitical factors represented by country decisions, such as those related to US tariffs and what is happening between the US and other countries, in addition to ongoing wars in the region, such as the war between Russia and Ukraine. These all lead to fears of a supply shortage, which sometimes leads to higher prices. When there are fears of a supply shortage, prices rise, and sometimes the effect is the opposite, such as the imposition of tariffs on China, which leads to expectations of a decline in Chinese demand for oil, as it is one of the largest consumers of crude oil. Therefore, imposing tariffs on China reduces its trade and economic activity, thus leading to a decline in demand, which is a negative indicator reflected in lower prices. Conversely, imposing sanctions on Iran and Russia, as producing countries, gives the impression of a possible supply shortage. Any sanctions on these countries could lead to a shortage of supplies, leading to higher prices. Overall, prices are volatile and depend on these factors. In addition, OPEC's decisions have a direct impact.