South African mining giant Sibanye…
Chinese automakers, Volkswagen, and BMW…
Iraq’s largest oil export terminal in Basra will stop operations for 24 hours starting at midnight today to get a new feeding pipeline, the state South Oil Company said. No details were provided as to whether the pipeline is a replacement for an existing one or it would increase the loading capacity of the terminal.
At the moment, Basra loads 1.8 million barrels daily. According to the South Oil Company, offshore loading, which takes place at three single-point moorings, will not be affected by the temporary suspension of Basra operations.
Iraq has been the main cause of worry for energy investors ever since OPEC agreed to cut its production in November last year, to stimulate an increase in oil prices. The cartel’s second-largest producer insisted it should be exempt from the agreement because of its dependence on oil revenues in the context of its fight against the Islamic State, but eventually agreed to a cut of 200,000 barrels per day.
Many expected Iraq to cheat on the deal, and these expectations were heightened after the country reported a daily export rate of 3.51 million bpd from the Basra terminal in December – a record high. Still, Oil Minister Jabar al-Luaibi said at the time he announced the export figure that Iraq is committed to cutting production as per the OPEC deal.
Related: Oil Markets On A Knife Edge Despite 91% OPEC Compliance
There has also been worry that the strained relations between the central government in Baghdad and the Kurdistan Regional Government will make it harder for Iraq to comply with its production cut commitment: the KRG is largely autonomous in its oil export decisions.
At the end of the first month of the six-month agreement, OPEC appears to have achieved a compliance rate of 91 percent, but this has not been enough to quench worries about the immediate future of oil’s fundamentals. Iraq is still producing 130,000 bpd above its target, a level of outstanding reductions that should be manageable to achieve, but it unlikely to continue fuelling doubts about the deal’s success.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for the U.S.-based Divergente LLC consulting firm with over a decade of experience writing on the oil and gas industry.