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The
Organization of the Petroleum Exporting Countries shifted policy
in 2014 to focus on market share rather than cutting production
to support prices, and at a meeting in Vienna on Thursday left
the strategy in place.
"OPEC let the market work and so far they are succeeding,
because it's affected investment," Falah Alamri, the head of
Iraq's State Oil Marketing Organization (SOMO), told Reuters.
Iraq is OPEC's second-largest producer.
"Investment now is declining. When investment comes to the
market it will take time to produce oil - one year, two years."
Oil prices at $50 a barrel <LCOc1> are about half the levels of
two years ago, before the strategy shift. But crude has risen
more than 80 percent from a 12-year low in January, supported by
signs that the price collapse is curbing output of U.S. shale
oil and other higher-cost supplies.
"So far, so good," Alamri said, asked whether he thought OPEC's
strategy was working.
"The fields that should survive are the low-cost fields. The
high-cost fields should go out."
A potential negative for OPEC may come from a significant drop
in world oil demand, said Alamri, who was cautious on the
outlook for prices over the rest of the year.
"Oil prices may continue the same current trends for a few
months then in the last months of the year may take a different
trend, if demand growth slows and supply remains stable or
increases," he said.
Iraq last year was OPEC's fastest source of supply growth,
boosting output by more than 500,000 barrels per day, despite
spending cuts and conflict with Islamic State militants.
Iraqi officials expect further growth in the country's exports
this year, but at a slower rate than 2015.
(Editing by Dale Hudson)
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