Iraq remains one of the most oil dependent countries in the
world. Its 2015 budget, which was just ratified by the country’s president
relies upon petroleum for 85% of its revenue. Unfortunately, neither the export
mark set in that document or the price for Iraqi crude are likely to be met
meaning that the government will be facing an even larger deficit than it
expects and a greater financial crisis.
January 2015 saw a drop in exports by Iraq. The country
average 2.35
million barrels a day, down from 2.941 million in December. That was the
lowest amount since 2.228 million in January 2014. The Oil Ministry blamed two
weeks of bad weather in the south for the decline, but there were two other
issues at play as well. One was that the Basra ports began receiving oil
from the Halfaya field in Maysan that does not produce as high quality
crude as other fields. That led some buyers to refuse the oil. The second was
that exports to Turkey were down
from 180,000 barrels a day in December to 145,000 in January. All of this oil
is coming from Kurdistan as part of its budget agreement with Baghdad. It
stopped sending all of its quota of petroleum in January. Poor weather often
hits the southern ports preventing tankers from docking there. The Oil Ministry
also has facilities to mix the Halfaya oil with petroleum from other fields
that would even out the quality, but because of the push to export as much as
possible it is being sent directly to the ports. Finally, Kurdistan claims that
it will increase its exports to Turkey later on so that by the end of the year
it is meeting its quota. That’s just one of many issues that plagues the agreement
between the two sides, and could lead to its collapse.
Iraq Oil Exports And Profits
2011-2014
Month
|
Avg.
Exports
(Mil/
Bar/
Day)
|
Avg. Price Per Barrel
|
Revenue (Bill)
|
Jan. 11
|
2.16
|
$90.78
|
$6.082
|
Feb.
|
2.20
|
$98.44
|
$6.064
|
Mar.
|
2.15
|
$107.13
|
$7.167
|
Apr.
|
2.14
|
$114.26
|
$7.342
|
May
|
2.22
|
$108
|
$7.47
|
Jun.
|
2.27
|
$105.17
|
$7.173
|
Jul.
|
2.16
|
$108.79
|
$7.311
|
Aug.
|
2.18
|
$104.91
|
$7.124
|
Sep.
|
2.10
|
$104.89
|
$6.619
|
Oct.
|
2.08
|
$104.04
|
$6.742
|
Nov.
|
2.13
|
$106.59
|
$6.833
|
Dec.
|
2.14
|
$106.18
|
$7.061
|
2011 Avg.
|
2.16
|
$105.00
|
$6.913
|
Jan. 12
|
2.10
|
$109.08
|
$7.123
|
Feb.
|
2.01
|
$112.92
|
$6.595
|
Mar.
|
2.31
|
$117.99
|
$8.472
|
Apr.
|
2.50
|
$116.79
|
$8.795
|
May
|
2.45
|
$103.03
|
$8
|
Jun.
|
2.40
|
$90.09
|
$6.453
|
Jul.
|
2.51
|
$97.14
|
$7.577
|
Aug.
|
2.56
|
$106.22
|
$8.445
|
Sep.
|
2.59
|
$107.59
|
$8.371
|
Oct.
|
2.62
|
$105.51
|
$8.578
|
Nov.
|
2.62
|
$104.32
|
$8.200
|
Dec.
|
2.34
|
$103.72
|
$7.551
|
2012
Avg.
|
2.41
|
$106.20
|
$7.846
|
Jan. 13
|
2.35
|
$104.92
|
$7.672
|
Feb.
|
2.53
|
$107.66
|
$7.644
|
Mar.
|
2.41
|
$103.76
|
$7.772
|
Apr.
|
2.62
|
$98.70
|
$7.764
|
May
|
2.48
|
$97.23
|
$7.477
|
Jun.
|
2.32
|
$97.40
|
$6.799
|
Jul.
|
2.32
|
$101.00
|
$7.272
|
Aug.
|
2.57
|
$104.45
|
$8.356
|
Sep.
|
2.07
|
$104.87
|
$6.511
|
Oct.
|
2.25
|
$102.57
|
$7.160
|
Nov.
|
2.381
|
$102.57
|
$7.324
|
Dec.
|
2.341
|
$102.89
|
$7.470
|
2013 Avg.
|
2.386
|
$102.33
|
$7.435
|
Jan. 14
|
2.228
|
$102.37
|
$7.074
|
Feb
|
2.799
|
$102.05
|
$8.001
|
Mar
|
2.396
|
$101.03
|
$7.507
|
Apr
|
2.509
|
$100.69
|
$7.582
|
May
|
2.582
|
$100.69
|
$8.077
|
Jun
|
2.423
|
$102.96
|
$7.470
|
Jul
|
2.442
|
$102.27
|
$7.742
|
Aug
|
2.375
|
$97.44
|
$7.172
|
Sep
|
2.542
|
$90.76
|
$6.916
|
Oct
|
2.432
|
$81.12
|
$6.120
|
Nov
|
2.51
|
$70.40
|
$5.25
|
Dec
|
2.941
|
$56.59
|
$5.161
|
2014 Avg.
|
2.51
|
$92.39
|
$7.013
|
Jan
|
2.35
|
$41.45
|
$3.258
|
Not only did Iraq witness a drop in exports, prices
continued to plummet as well. The country’s crude sold for an average price of
$41.45 per barrel down from $56.59 in December. That earned Iraq $3.258 billion
compared to $5.161
billion in December. International oil prices have collapsed in recent
months. Iraq already sells for lower prices than other producers, so it is
being hit harder. This is a huge shock to an economy that was selling petroleum
for over $100 per barrel just a few months ago, and the $7 billion a month
average it had been earning in the last four years.
The poor showing in January bodes ill for the new 2015
budget. That is based upon 3.3 million barrels a day in exports at $56 per
barrel. Even if those numbers were met there is an estimated $21 billion
deficit. That looks to be much larger now. That will pose a daunting challenge
to Baghdad. There are already questions about whether it will be able to cover
the projected budget and if it is even larger there’s no telling what could
happen.
SOURCES
Oil Marketing Company, “Iraq Crude Oil Export – December
2014,” 1/25/15
Salaheddin, Sinan, “Iraq’s oil exports dip by 14 percent in
January,” Associated Press, 2/12/15
Ven Heuvelen, Lando, Ben, “Iraq
financial crisis prompts emergency action,” Iraq Oil Report, 2/5/15
Van Heuvelen, Ben, Lando, Ben, Iraq, Ali Abu, al-Sai’di,
Jewdat, “Oil exports fall in January,” Iraq Oil Report, 2/3/15
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