• 3 minutes e-car sales collapse
  • 6 minutes America Is Exceptional in Its Political Divide
  • 11 minutes Perovskites, a ‘dirt cheap’ alternative to silicon, just got a lot more efficient
  • 18 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 1 day How Far Have We Really Gotten With Alternative Energy
  • 10 days They pay YOU to TAKE Natural Gas
  • 6 days What fool thought this was a good idea...
  • 9 days Why does this keep coming up? (The Renewable Energy Land Rush Could Threaten Food Security)
  • 4 days A question...
  • 15 days The United States produced more crude oil than any nation, at any time.

OPEC’s No.2 Suffers From Saudi-Russian Oil Price War

OPEC’s second-largest producer, Iraq, has been grappling with street protests for months and the coronavirus outbreak for a few weeks, and now it faces another tough ­test for its finances—the oil price crash will likely force heavily-oil-dependent Iraq to suspend new infrastructure and energy projects.

The OPEC producer may also have to resort to international borrowing to make sure it can pay salaries to public servants after oil prices collapsed to half the price Baghdad had planned to budget this year, Iraqi lawmakers and officials told Reuters.

Iraq, which relies on oil revenues for 95 percent of its budgetary income, is one of the least diversified economies in the Middle East. It will likely have to enforce strict austerity measures after its fellow OPEC member and the cartel’s de facto leader, Saudi Arabia, launched an all-out oil price war with Russia, after the former allies abruptly ended the OPEC+ production cut deal last Friday.   

“The oil price collapse ... means the deficit will be doubled and the only choice left for Iraq is to resort to international creditors,” Mudhhir Salih, an economic advisor in the office of Iraq’s prime minister, told Reuters.

According to an analysis of Iraq Oil Report of official Iraqi export data, should Brent Crude prices stay at around US$30 a barrel, Iraq’s revenues would be less than US$3 billion a month, which is US$2 billion short of the sum Iraq needs just to pay its current expenses.

The oil price war will hurt the fiscal revenues of the oil producers in the Persian Gulf, including the Saudis, credit rating agency Fitch said earlier this week and warned that a new wave of sovereign rating downgrades could be in the works if the oil slump continues. 

The oil price war and the price crash will impact all economies in the Middle East, but Iraq’s precarious position even before the price collapse could make it one of the biggest losers in the OPEC-Russia standoff.

By Tsvetana Paraskova for Oilprice.com

ADVERTISEMENT

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News