Oil halted its rise as Iraq threatened to derail OPEC’s plan to stabilize crude markets by saying it should be exempt from planned output cuts.
Prices fell fell more than 1 percent in New York. Iraq should be exempted from trimming production because it’s embroiled in a war with Islamic militants, Oil Minister Jabbar Al-Luaibi said Sunday in Baghdad. Oil was down 61 cents to $50.24 a barrel in New York shortly before 8:50 a.m. Central time.
Oil has fluctuated near $50 amid uncertainty about whether the Organization of Petroleum Exporting Countries can implement an accord to reduce output when they gather at an official meeting in November. A committee will meet later this month to try to resolve differences over how much individual members should pump. U.S. drillers in the are returning rigs to shale areas as rising oil prices over the past month make it feasible for them to raise output. Rigs targeting crude in the rose for an eighth week, according to the Houston oil services company Baker Hughes.
“Iraq’s request to be exempted from a deal to cut output has further clouded the prospect of OPEC strategy to stabilize the oil market succeeding,” said Jens Naervig Pedersen, a Copenhagen-based analyst at Danske Bank A/S. “At the same time, the oil rig count indicates that U.S. shale producers are slowly returning, making OPEC’s life even more difficult.”
Brent for December settlement declined as much as 41 cents, or 0.8 percent, to $51.37 a barrel on the London-based ICE Futures Europe exchange. The global benchmark crude traded at a premium of $1.04 to WTI.
Iraq disputes OPEC figures that peg the nation’s output at less than 4.2 million barrels daily, Al-Luaibi said. The country is producing more than the 4.7 million barrels a day it pumped in September, he said. Iran, Nigeria and Libya are the only nations currently exempt from the proposed production cuts.
The fastest pace of manufacturing and services growth this year in Europe failed to sustain higher oil prices. A Purchasing Managers’ Index for the euro zone rose to 53.7 in October, IHS Markit said on Monday.