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Market: Oil Prices Fall Following Iraq’s Backtracking on OPEC Output Curb

Oil prices have fallen following Iraq’s statement that it sought to be exempt from the OPEC’s planned output cuts, as the group seeks to stabilise crude market.

Iraqi officials were reported on Sunday saying they would not reduce output, which is currently at 4.77 million barrels per day, because the country needed more fund to fight Islamic State militants.

Oil prices fluctuate around US$50 per barrel, mostly down 30 cents or 0.6%. West Texas Intermediate for December delivery dropped 33 cents to close at $US50.52 per barrel on the New York Mercantile Exchange. Brent fell 32 cents to $US51.46 per barrel.

Iraq is the second-largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia.

“Iraq’s request to be exempted from a deal to cut output has further clouded the prospect of OPEC strategy to stabilise the oil market succeeding,” said Danske Bank analyst, Jens Naervig Pedersen.

“There is a risk that Iraq’s refusal could trigger a domino effect that other producers would ask to be exempt from the cuts too,”  SCI International energy analyst, Gao Jian said.

OPEC members Iran, Libya and Nigeria expected to be spared from the deal. “If they do nothing, OPEC production next year is likely to average at least 34 mbpd (million barrels a day) with a real threat of it reaching close to 35 mbpd if the chaos in Libya and Nigeria were to be resolved,” broker PVM said.

OPEC produced a record of 33.75 million barrels per day in September, with Saudi Arabia producing 10.58 million of them.