OPEC said it expects full compliance to production cuts by UAE and Iraq as the cartel met in Abu Dhabi to discuss voluntary output cuts aimed at reining in crude inventories to prop up oil prices.
The Organization of the Petroleum Exporting Countries, Russia and other producers agreed to cut output by about 1.8 million barrels per day (bpd) until March 2018 to bring crude inventories to a five-year average.
In UAE, oil ministry officials from Russia, Kuwait and Saudi Arabia, and OPEC's Vienna headquarters, met individually with officials from Iraq, the United Arab Emirates, Kazakhstan and Malaysia.
OPEC producers Iraq and the UAE have shown relatively low compliance with the deal based on figures from secondary sources OPEC uses to monitor its supply. Non-OPEC member Kazakhstan, rather than reduce its output as promised, has steadily increased it, with the expansion of its Kashagan oilfield. Malaysia has also boosted output in the last few months, according to the International Energy Agency.
"Discussions were conducted in a constructive atmosphere and proved fruitful," OPEC said in a statement. "The conclusions reached with the countries at the meeting will help facilitate full conformity.”
Iraq’s compliance dropped to 29 percent in June to its lowest so far, while the U.A.E. made just 60 percent of its cuts, according to data from the International Energy Agency. Iraq has complained that the estimates OPEC uses to monitor compliance are inaccurate, and that it has actually made the full reduction required.
OPEC uses supply estimates compiled from six external entities, known as secondary sources, to monitor adherence to the deal. These include media outlets and institutions like the Paris-based IEA and the U.S. government’s Energy Information Administration.
"The UAE, Iraq, Kazakhstan, and Malaysia all expressed their full support for the existing monitoring mechanism and their willingness to fully cooperate with the JTC and JMMC in the months ahead in order to achieve the goal of reaching full conformity," OPEC said.
The panel’s conclusions will be discussed when the full technical committee next meets, on Aug. 21 in Vienna, OPEC said.