Tuesday, April 7, 2015

March 2015 Iraq Reaches Another Record High In Oil Exports, Still Not Enough To Meet Budget


In March 2015 Iraq exported the most oil since 2003. Bloomberg said it was the most in 35 years. A slight uptick in prices also meant that the country earned the most so far this year. Unfortunately those amounts were still not meeting the marks set in the 2015 budget. March was another hint at the potential the Iraqi oil industry has, but also the dire economic situation the country is in.

Iraq exported an average of 2.98 million barrels a day in oil last month. That was up from February’s 2.597 million barrels. March’s figure surpassed the previous post-2003 high of 2.941 million barrels from December 2014. Good weather was noted as the cause for the increase, which allowed for an average of 2.71 million barrels to be shipped out of Basra. In previous months poor conditions in southern Iraq created choppy waters that prevented oil tankers from docking there. In comparison, the petroleum flow to Turkey declined from 304,000 barrels in February to 268,000 in March. Under the 2015 budget agreement Kurdistan is to export an average of 550,000 barrels a day. It has not reached that amount so far. Iraq Oil Report noted that because it has mounting debts, the Kurds have been carrying out independent exports to earn money to pay down what they owe. The Kurdistan Regional Government said that it would up its exports later on so that by the end of 2015 it will meet its quota. Basra and Iraq’s overall exports were also below the budget quotas of 2.75 million and 3.3 million barrels respectively.

Iraq Oil Exports & Revenues 2014-15
Month
Avg.
Exports
Avg. Price
Per Barrel
Earnings
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
2.535
$41.45
$3.258
Feb
2.597
$47.43
$3.449
Mar
2.98
$48.24
$4.46

In March Iraq’s crude sold for an average price of $48.24 per barrel. That was the highest amount so far this year. That brought in $4.46 billion up from February’s $3.449 billion. That was still 36% lower than the 2014 average of $7.013 billion. The 2015 budget calls for $56 per barrel however, which means that Baghdad will still be struggling with meeting all of its costs.

March’s exports show what Iraq can do. It has the potential to reach roughly 3.3 million barrels a day. The problem as ever is that weather, maintenance work, political disputes and decisions have always negatively affected oil output and caused constant fluctuations. The other issue is that oil prices remain low, and increases remain incremental. If Iraq were to reach $56 per barrel it would probably be months from now. Since the previous administration of Prime Minister Nouri al-Maliki spent most of Iraq’s reserves the current government is largely living month to month off of its oil earnings. That puts all the emphasis upon exporting as much as possible. March’s news was welcome, but sustaining that level and then increasing it will be the real challenge.

SOURCES

Al-Ansary, Khalid and Ajrash, Kadhim, “Iraq Crude Oil Exports Rise 15% in March to Highest in 35 Years,” Bloomberg, 4/1/15

Van Heuvelen, Ben, “March oil exports rebound to record levels,” Iraq Oil Report, 4/2/15

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