Starting in 2011, Iraq’s oil exports received a nice boost from the work of international oil companies that signed a number of deals in 2009. As happened in previous years, production has since flattened out as the country’s infrastructure is at near capacity, and cannot handle any larger flows of oil. At the same time, due to unrest in the Arab world, especially in Libya, international petroleum prices have risen to over $100 a barrel for the last six months. That means despite exports flat lining, Iraq has still been able to bring in huge profits, so much that it has already surpassed all of last year’s revenue.
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| (Middle East Online) |
August 2011 showed how Iraq’s oil industry is at or near capacity. Exports were at an average of 2.19 million barrels a day. That was slightly up from July’s average of 2.16 million barrels, but below this year’s high of 2.27 million barrels achieved back in June. The rise in exports was due to an increase in overall production from 67.2 million barrels in July to 67.9 million last month. That put August at just about the yearly average. So far this year, Iraq has exported 2.18 million barrels per day. This is above last year’s mark of 1.89 million. Still, the numbers show that exports have flattened out. Foreign oil firms that entered Iraq in 2009 have been able to increase output, but the pipelines and terminals cannot handle anymore.
Luckily, prices for Iraqi oil remain high. The cost for buying Iraqi crude slightly dipped, going from an average of $108.80 per barrel in July to $104.92 in August. August marked the sixth straight month that Iraqi petroleum has sold for more than $100 per barrel. For the year, prices have averaged $104.68 per barrel. In 2010 they averaged $75.62. The Arab Spring is responsible for the high prices. Starting in December 2010 with protests in Tunisia, the Middle East has been wracked with a series of demonstrations and the civil war in Libya. The latter has severely cut its oil production as a result. This has increased fears in international markets over access to the region’s resources, and upped prices.
Iraq Oil Exports And Profits 2010-2011
Month | Avg. Exports (Mil/ Bar/ Day) | Avg. Price Per Barrel | Revenue (Mil) |
Jan. 10 | 1.92 | $73.97 | $4.441 |
Feb. | 2.05 | $73.04 | $4.229 |
Mar. | 1.84 | $76.20 | $4.351 |
Apr. | 1.80 | $79.66 | $4.222 |
May | 1.88 | $73.85 | $4.335 |
Jun. | 1.86 | $71.10 | $3.889 |
Jul. | 1.82 | $71.21 | $4.009 |
Aug. | 1.82 | $71.43 | $3.957 |
Sep. | 2.02 | $73.07 | $4.428 |
Oct. | 1.91 | $77.10 | $4.526 |
Nov. | 1.92 | $80.59 | $4.618 |
Dec. | 1.95 | $86.31 | $5.222 |
Jan. 11 | 2.16 | $90.78 | $6.082 |
Feb. | 2.20 | $98.44 | $6+ |
Mar. | 2.15 | $107.13 | $7.167 |
Apr. | 2.14 | $114.26 | $7.342 |
May | 2.22 | $108 | $7.45 |
Jun. | 2.27 | $105.16 | $7.173 |
Jul. | 2.16 | $108.80 | $7.3 |
Aug. | 2.19 | $104.92 | $7.124 |
Iraq has been an unexpected beneficiary of the unrest, which is good for its finances. In the first eight months of 2011 it has already surpassed the total revenues of 2010. Last year, Iraq earned $52.202 billion from its oil exports. This year it has already earned $55.733 billion. That’s good news for Baghdad. At that rate, it will bring in around $83.5 billion by the end of the year. That will cover the 2011 budget, which was set at $82.62 billion. Originally, the government expected a $13.44 billion deficit, but that doesn’t look likely now. The ministries and various offices also lack the capacity to deal with all of their budgets, so even if oil prices were to dip at the end of the year, there will still probably be a surplus leftover.
The trends seen in Iraq’s oil industry in the first eight months of the year are likely to continue for the remaining four. Exports will hover just around 2.2 million barrels, while prices will remain high. Iraq has plans to boost its capacity, but implementing them has gone very slowly. It’s probably two to three years until the first projects come on line. Until the country is able to complete these major renovation and development projects on its oil infrastructure, this will be the status quo in the foreseeable future.
SOURCES
Agence France Presse, “Iraq eclipses 2010 oil income in eight months of 2011,” 9/22/11
Aswat al-Iraq, “Iraqi oil exports up by 700,000 barrels in August,” 9/22/11
Special Inspector General for Iraq Reconstruction, “Quarterly Report and Semiannual Report to the United States Congress,” 7/30/11
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