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Matt Smith

Matt Smith

Taking a voyage across the world of energy with ClipperData’s Director of Commodity Research. Follow on Twitter @ClipperData, @mattvsmith01

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Caught Red-Handed? Iraq Is Talking Down Its Oil Exports

Even though crude prices may be subdued amid thin trading over the holiday period, there is always a thing (or five) going on in the oil markets. Henceforth, hark...here are five things to consider in oil markets today:

1) SOMO, Iraq's state oil marketing company, has issued a statement saying it has firm plans to 'cut daily crude oil exports by specified percentages' as it looks to comply with its agreed production cut of 210,000 bpd. One thing it doesn't mention, however, is whether it will cut output by January 1, as agreed. (An aside: my gosh, 2017 is going to be epic).

2) According to our ClipperData, crude waiting offshore in the Gulf of Mexico has risen to a four-month high at just under 25 million barrels, amid strong arrivals from the Arab Gulf last week. There is still a backlog of large vessels in the US Gulf after inclement weather slowed imports in the week before last, while a modicum of ad valorem tax strategizing is also likely underway - bolstering volumes offshore.

(Click to enlarge)

3) While Iran has entered into agreements relating to its natural gas - with deals with Total and CNPC - the country is yet to sign any oil deals with international companies - despite oil minister Bijan Zanganeh outlining 50 potential projects late last year.

4) In recent days, BP has announced two deals - a $2.2 billion expansion of output in Abu Dhabi, and a $916 million investment in fields in Mauritania and Senegal. BP this year has also bought a 10 percent stake in Eni’s Egyptian gas field, Zohr, for $375 million, and part of Indonesia’s Tangguh LNG project for $313 million. Key takeaway? As oil prices rise, so doth the fortunes of the whole industry. Related: Why Wind Power Will Outperform Solar In 2017

The company also approved the $9 billion expansion of the Mad Dog project in the Gulf of Mexico this month, as well as backing an $8 billion expansion of the aforementioned Tangguh project. As the chart below illustrates, this brings its acquisitions for this year to more than $3.8 billion, the highest since 2011.

(Click to enlarge)

5) Finally, according to Wood MacKenzie, a net 450,000 bpd of crude processing capacity will be added next year in Asia. This is the most since 2014, as refinery expansions from China to India will offset closures in Japan. This increase equates to a ~1.5 percent rise in Asian refining capacity; it is currently nearly 29 million bpd.

By Matt Smith

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