Iraq will reduce the amount of crude oil it exports via its largest port terminal in Basra to 3.013 million bpd next month, according to loading data seen by Reuters. This is the lowest daily figure since last August. The Basra light blend will account for 2.21 million bpd of total Basra exports.
This may be a signal that Iraq is working to improve its compliance with the November 30 production cut agreement struck by OPEC's members in a bid to prop up crude prices. As of end-January, Iraq was still producing 130,000 bpd above its quota.
In a string of mixed signals, however, last week, the state-owned South Oil Company, which operates the Basra terminal, said it would stop operations for 24 hours because of the installation of a new feed-in pipeline: the terminal's loading capacity currently stands at 1.8 million bpd.
In January, the South Oil Company also announced an expansion of another oil export terminal, Khor al-Amaya, to bring its daily capacity to 1.2 million barrels.
Expansion works should finish by June, suggesting that Iraq, like Saudi Arabia, does not believe an extension of the OPEC production cut agreement will be necessary. While the negotiations on the agreement were ongoing, Iraq was vocal in its insistence to be exempted from it as oil revenues are vitally important for the country, which is still fighting ISIS and needs every petrodollar to continue doing it.
Related: Will Rising U.S. Production Drive OPEC Into A Corner?
Many expected Iraq to cheat on the output cut 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.
Last week the International Energy Agency commended OPEC on its high compliance rate, which was estimated at around 90 percent, according to various reports, with Iraq standing out as the biggest underperformer.
By Irina Slav for Oilprice.com
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