'OPEC must ask Russia to join cartel if Iraq quits'
A'an Suryana, The Jakarta Post, Jakarta
World oil prices could gradually fall to US$16 per barrel if Iraq quit OPEC, as the market would anticipate an oversupply, while the oil cartel would loose its ability to influence oil prices, analysts said.
Oil analyst Kurtubi said over the weekend that to help maintain OPEC's leverage in the market, the Organization of Petroleum Exporting Countries should persuade Russia, a major oil producing country, to join the group.
"Indonesia can start the campaign to persuade Russia to become a full member of OPEC," he told The Jakarta Post.
Kurtubi explained that a sharp drop in oil prices would be detrimental to the Indonesian economy as the state budget was heavily funded by revenue from the commodity.
Iraq has some 112 billion barrels of oil reserves, second to Saudi Arabia's 250 billion barrels.
Since the end of the U.S.-led war in Iraq, there has been speculation that the country would leave OPEC for various reasons.
First of all, Iraq would demand an oil production quota equal to Iran's 3.49 million barrels of barrels per day (bpd) to help boost revenue to help finance its reconstruction program. Many members of OPEC would likely reject such a demand. This would prompt Iraq to quit the cartel.
Prior to the war Iraq produced around 2.5 million bpd.
Another reason may come from the U.S., which is keen to see oil prices fall to help revive the weak world economy.
"If Iraq really quit OPEC, oil prices could plunge to between $16 to $18 per barrel," energy analyst Ramses Hutapea said.
Oil prices are currently hovering at around $25 per barrel, still higher than the government's target of $22 per barrel for this year, but lower than the more than $30 per barrel before the start of the war two months ago.
OPEC's 11 members collectively supply 40 percent of the world's oil output, and posses more than three-quarters of the world's total proven crude oil reserves.
Founded in 1960 in Baghdad, Iraq, OPEC aims at coordinating and unifying petroleum policies among member countries, in order to secure stable prices for petroleum producers.
OPEC members are Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.