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Oil flows out of Iraq suggest that the Middle East country is complying, at least in part, with OPECs plan to curb production.

Observed shipments in January were 109,000 barrels a day below Octobers level,the month used as a baseline for the Organization of Petroleum Exporting Countries reductions plan. That indicates that Iraq has implemented around half of the production cut it agreed as part of the accord, assuming flows provide an indication of output.

Shipments from OPECs second-largest producer fell to 3.805 million barrels a day in January from Decembers 4.03 million, tanker-tracking data and port agent reports showed, with the decline mainly reflecting a 6.5 percent drop in flows from the southern port of Basra.

The Iraqis are making the bulk of their cuts at southern fields, said Robin Mills, chief executive officer of Dubai-based consultant Qamar Energy, who advises clients working in the region. Most of the decline is coming in the south because the Iraqis have moved forward some of the maintenance on fields there. The Kurds havent been cutting and I dont expect them to cut at all.

OPEC and 11 other producing countries including Russia agreed late last year to cut a combined 1.8 million barrels a day of output starting from January, with Iraqs share set at 210,000 barrels. Some analysts expressed doubts that Iraq would deliver its share of the cuts, potentially undermining the drive to rebalance the market and drain inventories bloated by two years of unfettered production that helped to crash prices.

During the months of negotiation that led to Novembers OPEC agreement, Iraq had insisted repeatedly that it should be exempted from cuts as it battles the Islamic State insurgency and rehabilitates its oil industry after years of war and sanctions. The country also disputed the data to be used in any discussions, insisting that numbers compiled by OPEC underestimated Iraqi production by about 5 percent. Iraq ultimately relented, agreeing to reduce its output.

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Adherence to the deal is great and OPEC probably wont need to extend the accord when it expires in the middle of the year, Saudi Arabia Energy Minister Khalid Al-Falih said on Jan. 22 when countries met in Vienna to discuss monitoring implementation.

Iraq was close to implementing its share of the agreed production cuts and would be in full compliance by the end of the month, Oil Minister Jabbar Al-Luaibi said Jan. 23. The Middle Eastern producer had already reduced output by 180,000 barrels a day and would cut another 30,000 soon, Al-Luaibi said in a Bloomberg television interview.

While 90 percent of the output cuts have come from fields operated by companies run by Iraqs federal government, Baghdad is also coordinating reductions with the semi-autonomous region of Kurdistan and international oil companies, he said.

Iraq saw lower shipments from both Basra and from the Ceyhan terminal in Turkey, from where it exports crude originating in the Kurdish region and from Baghdad-controlled fields around Kirkuk, according to the ship-tracking data.

Exports from Basra averaged 3.235 million barrels a day in January, down from a record 3.46 million in December, the data showed. Exports of Kurdish crude, and oil from Iraqs northern fields through Ceyhan, fell to about 569,000 barrels a day from 572,000 barrels in December.

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Iraq Plays Ball With OPEC as Tanker Tracking Shows Flows Are Cut - Bloomberg