In a recent note, Goldman…
The Freeport McMoRan Grasberg copper…
Iraq has not cut February crude supply allocations of the Basra grade to three buyers in Asia and Europe, in a sign that OPEC’s no.2 producer could keep exports at the southern Basra ports high while cutting from elsewhere.
According to three sources quoted by Reuters, Iraq will supply in full the amount the three refiners in Asia and Europe had nominated for February.
After weeks of demanding exemption from the cartel cuts due to revenues needed to fight Islamic State, and after having disputed OPEC’s secondary sources figures used to calculate baseline producer output, Iraq finally conceded and agreed in OPEC’s November 30 deal to cut production by 210,000 bpd from a reference production level of 4.561 million bpd.
Between the end of November and January 1, the day that OPEC cuts took effect, various reports suggested that Iraq was boosting exports from Basra and increasing crude oil sales to China, India and the U.S.
Last Thursday, Iraq’s Oil Minister Jabar Ali al-Luaibi said in a statement on the oil ministry’s website that “Iraq confirms its commitment” with the OPEC decision and had started procedures to cut its crude oil production in the beginning of 2017 in line with that decision.
Earlier today, the minister said in another statement that Iraq’s exports from the southern ports reached a record average rate of 3.51 million bpd in December, just a month before the OPEC cuts started.
The achievement of this average, however, does not affect Iraq’s decision to cut production as of the beginning of 2017, al-Luaibi said.
While other OPEC members either have strong incentives to stick to their promised cut and/or have one state-held national oil company complying (hopefully for OPEC) with the cuts, Iraq has a couple of country-specific issues that may make compliance very difficult. One is the fact that it is probably the Middle East producer with the most international-oil-company-operated production, and the other is that the semi-autonomous Kurdistan Regional Government (KRG) in the north, which controls some oilfields there, is unwilling to cooperate with the Baghdad central government and take part in the cuts.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing for news outlets such as iNVEZZ and…