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Oil Rises Ahead of Weekly Inventory Data

Oil Rises Ahead of Weekly Inventory Data

Preview Text: Crude continues to…

Iraq Oil Exports From South Close To Record-High

Crude oil exports from southern Iraq are close to a record-high so far in September, averaging 3.6 million bpd as of yesterday, Reuters reports, citing sources in the know who had tracked shipping data to come up with the number. If the rate stays unchanged or rises, it will beat Iraq’s previous record of 3.58 million bpd hit last month.

It’s safe to say that Iraq, OPEC’s second-largest producer, was only too happy to boost oil production after the June 22 meeting of the cartel when members decided to start reversing their production cuts agreed in late 2016. Iraq never really managed to reduce production to its assigned quota anyway, and it was vocal against the quotas because of its heavy dependence on oil revenues as its economy is still in ruins after the war and the fight with Islamic State.

What’s more, the export rate data suggests that civil unrest, which has been rife since the summer, has not affected oil production. Indeed, any intentions on the part of protesters to try and cause production outages at oil fields have been quickly thwarted.

Besides the export growth, Iraq is also understandably eager to increase its oil production. However, according to at least one analyst, this will be difficult to achieve. IHS Markit’s Christopher Elsner, as cited earlier this week by Arab News, Iraq faces serious challenges in its quest for boosting its production, ranging from the current political and economic problems to lack of funds to invest in new production capacity development.

“There is a lot of investment in getting wells out of the ground. And there’s a lot of investment in exporting that oil. But the connections between the oil fields and the storage farms in the south and the export points have been what has really led to the bottlenecks in Iraq,” Elsner explained.

By Irina Slav for Oilprice.com

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