Iraq is committed to complying with its 220,000 barrels per day oil output cuts in line with the Opec+ policy to tighten global supply and support prices, the country's oil minister said.
The country is ready to increase production if required to do so by the alliance, Reuters cited oil minister Hayan Abdel-Ghani as saying during a conference in Baghdad on Sunday.
“We obliged some oil companies operating in the south to cut production to come in line with Opec+’s agreed rates,” he was quoted as saying.
Iraq, Opec’s second-largest producer, depends on oil revenue to meet 90 per cent of government expenditure.
The country exports about 3.3 million barrels of oil per day, while production in the semi-autonomous Kurdish region amounts to more than 450,000 bpd.
The country is seeking international collaboration to boost its energy supply.
Sharjah energy company Crescent Petroleum signed three 20-year agreements to develop oil and gas fields in Iraq last month.
Iraq has also signed deals with two Chinese companies focusing on gas exploration, Reuters reported, citing an oil ministry source.
At its last meeting, the Opec+ alliance of 23 oil-producing countries agreed to extend its existing oil output cuts of 2 million bpd until the end of 2023.
The move was the latest effort by the group to support prices as a potential economic slowdown weighs heavily on the outlook for fuel demand.
Opec+ agreed in the spring of 2020 to cumulatively cut crude output by a record 9.7 million bpd as it faced a coronavirus-induced crash in oil prices. The alliance then gradually unwound the cuts over the past two years.
Brent, the benchmark for two thirds of the world’s oil, slid 2.32 per cent to settle at $72.97 a barrel on Friday.
West Texas Intermediate, the gauge that tracks US crude, lost 2.36 per cent to close at $66.74 a barrel.
Although crude oil demand is expected to rise “sharply” this year on Chinese demand and a rebound in air travel, the market is currently in a surplus as Russian crude barrels are being rerouted to new destinations, the International Energy Agency said in a report last week.
On Tuesday, Opec raised its forecast for Chinese oil demand growth on the relaxation of Covid-19 measures.
However, it stuck to its global demand estimate of 2.3 million bpd, citing a potential economic slowdown in Europe and the Americas.
Iraq's economic recovery is being supported by higher oil prices, but it remains vulnerable to shocks from market volatility, the International Monetary Fund said in a report last month.
Oil production is expected to rise to 4.6 million bpd this year from 4.4 million bpd last year, and 4.7 million bpd in 2024, to reach about 5 million bpd by 2027, the Washington-based fund said.
Iraq exported an average of about 3.6 million bpd in 2022, with an average price of $96.90 a barrel, the IMF said.
Oil exports are projected to grow to 3.9 million bpd this year and rise to 4 million bpd in 2024, with average prices of $83.10 and $77.80 per barrel, respectively, it added.
Killing of Qassem Suleimani
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
