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Iraq Agrees With Deal Extension, But Boosts Oil Exports To Record Levels

Iraq’s May export figures show the Middle Eastern nation reaching for the sky to dominate the Asian oil supply game, according to new shipping data analyzed by Bloomberg.

Sixty-two million barrels of crude left Iraqi ports in vessels over the first half of this month. At this rate, the country will clock in a 4.14 million bpd export rate – a sizeable increase from the 3.252 million bpd rate it reached in April.

Production restrictions from the Organization of Petroleum Exporting Countries (OPEC) dictate that the country should limit its production to 4.351 million barrels per day, but exports for bloc members remain unbound. Iraqi Oil Minister Jabbar al-Luaibi announced yesterday that his country backs efforts to extend the limits through March 2018.

Iraq’s compliance to its production target was always going to be a moving target as the country was reluctant to limit production in the first place,” Edward Bell, a commodities analyst at the UAE-based bank Emirates NBD, told Bloomberg. “The higher Iraqi volumes shows one of the flaws of the deal: the focus on production rather than exports.”

A large share of the new exports is likely reaching Asia. India imported more than 1 million bpd from Iraq last month, which made OPEC’s second-largest producer the top crude supplier to the fast growing Asian economy, data from Thomson Reuters showed earlier today. Previously, Saudi Arabia was the largest oil exporter to India.

Related: Oil Prices Set To Rise On Back Of OPEC Deal Extension

India preferred Iraq overtook the latter’s larger neighbor because of Basra Heavy’s cheaper price and its physical properties, which are “good for refineries with coker units…[and] good for conventional refiners that make bitumen as that is in demand in India,” according to the chairman of Hindustan Petroleum Corp., M. K. Surana.

Riyadh has cut export prices for Asia since news of emerging Iraqi dominance broke.

By Zainab Calcuttawala for Oilprice.com

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