By Rania El Gamal, Maha El Dahan and Stanley Carvalho
ABU DHABI (Reuters) - Iraqi Oil Minister Jabar al-Luaibi said on Saturday that the OPEC member's oil output capacity is nearing 5 million barrels per day, but the country will remain in full compliance with its output target under a global pact to cut supplies.
Luaibi said the supply cut agreement between OPEC and non-OPEC producers should continue despite a rise in oil prices.
"The market now is not 100 percent stable," he said at an industry conference in Abu Dhabi, adding that current oil prices could be sustained, but there might be some fluctuations.
For the week, Brent crude rose 3.3 percent, while U.S. West Texas Intermediate (WTI) crude jumped 4.7 percent, having hit its hit its strongest since late 2014 at $64.77 on Thursday.
The deal between the Organization of the Petroleum Exporting Countries and Russia to cut 1.8 million barrels per day of crude, which started in January 2017, is due to last until the end of 2018.
Luaibi said current Iraq's oil production is about 4.3 million barrels per day.
Despite the increase in oil production from the United States, "so far there is a balance" in the oil market, Luaibi said.
"We are watching the market and the market is okay in terms of supply and demand balance. There’s still a gap, inventories are still high. The inventory level will decrease gradually and we will see how things will go," he told reporters.
Luaibi also said that his ministry plans to conclude three contracts with international gas companies by mid-2018 to utilize gas from Basra, Maysan and Nassiriyah southern provinces.
He said that by 2021, the country plans to "reach zero gas flaring".
Iraq is forced to flare some of the gas produced alongside crude oil as it lacks the facilities needed to capture and process it into usable fuel.
The country has just one gas processing company, the Basrah Gas Company, a joint venture between Iraq's state-run South Gas Co., Shell (LON:RDSa) and Mitsubishi.
OPEC’s second-largest crude producer after Saudi Arabia, Iraq is seeking to increase its oil and gas income, which account for nearly all its public budget.