Iraq’s oil exports reached new highs in the last few months,
but that contributed to the international oil glut. The result was that prices
for Iraq’s crude have continued to plummet over the last six months crippling
Baghdad’s revenues, and threatened the government’s ability to sustain itself.
In January 2015, Iraq exported an average of 3.285
million barrels a day. That was the second highest amount in the post-2003
era with only November recording more at 3.365 million. In fact the last three
months have all seen very good numbers. This has been due to the opening of
single point mooring facilities over the last year or so that have increased
capacity in the southern Basra ports, and the marketing of the new Basra
Heavy crude that has opened up new sales opportunities. This has made up
for Kurdistan ceasing its foreign sales for the central government in September
2015.
The problem Iraq faces is that these new export figures have
contributed to the high supply of oil on the international market leading to a
collapse in prices. On January 25
for example, oil prices dropped 5% based upon Iraq’s December export figures.
By the end of the month a barrel of Iraqi crude sold for only $22.21. That was
half the price the nation’s oil was going for last year. The result was that
the country only earned $2.26 billion for the month, 45% below its 2015 monthly
average of $4.079 billion. All of the world’s major oil producers are dealing
with the drop in prices the same way, maintaining or increasing production to
try to earn as much as possible. That situation will only get worse when Iran
re-enters the market when its sanctions are fully lifted.
Iraq is facing a huge dilemma. Over 90% of its revenues come
from oil. It has a bloated public sector that has only grown over the years
when it was flush with cash. It is also facing the war with the Islamic State
and a huge internal refugee crisis. It is only surviving by going through its reserves,
which can’t sustain the heavy spending for long. Rather than taking this
opportunity to develop the private sector and cut the fat from the government,
Baghdad is likely to go into debt borrowing from investors and banks, and might
eventually follow the lead of the Kurdistan Regional Government and stop paying
its civil workers and cutting services when its cash runs low. Like many oil
dependent countries, Iraq can’t shake its addiction even during a crisis.
Iraq Oil Exports & Revenues 2015-16
|
Month
|
Avg.
Exports
|
Avg. Price
Per Barrel
|
Earnings
(Bil)
|
|
Jan
|
2.535
|
$41.45
|
$3.258
|
|
Feb
|
2.597
|
$47.43
|
$3.449
|
|
Mar
|
2.98
|
$48.24
|
$4.457
|
|
Apr
|
3.077
|
$51.70
|
$4.8
|
|
May
|
3.145
|
$55.87
|
$5.447
|
|
Jun
|
3.187
|
$55.32
|
$5.289
|
|
Jul
|
3.104
|
$50.99
|
$4.908
|
|
Aug
|
3.079
|
$40.59
|
$3.874
|
|
Sep
|
3.052
|
$40.32
|
$3.692
|
|
Oct
|
2.7
|
$39.56
|
$3.320
|
|
Nov
|
3.365
|
$36.42
|
$3.67
|
|
Dec
|
3.215
|
$29.84
|
$2.793
|
|
2015 Avg.
|
3.003
|
$44.81
|
$4.079
|
|
Jan
|
3.285
|
$22.21
|
$2.26
|
2015-16 Oil Exports From Basra
Jan 2.39
mil/bar/day
Feb 2.29
mil/bar/day
Mar 2.71
mil/bar/day
Apr 2.62
mil/bar/day
May 2.69
mil/bar/day
Jun 3.022
mil/bar/day
Jul 3.064
mil/bar/day
Aug 3.021
mil/bar/day
Sep 3.03
mil/bar/day
Oct 2.7
mil/bar/day
Nov 3.37
mil/bar/day
Dec 3.215
mil/bar/day
Jan 3.285
mil/bar/day
2015-16 Oil Exports By Kurds For
Baghdad
Jan 153,000
bar/day
Feb 306,000
bar/day
Mar 268,000
bar/day
Apr 450,000
bar/day
May 451,000
bar/day
Jun 164,733
bar/day
Jul 41,000
bar/day
Aug 50,900
bar/day
Sep 21,500
bar/day
Oct 0.0
Nov 0.0
Dec 0.0
Jan 0.0
SOURCES
Kumar, Devika Krishna, “Oil hit again after Iraq supply adds
to glut,” Reuters, 1/25/16
Reuters, “Iraq’s January oil exports rise slightly,” 2/1/16
Van Heuvelen, Ben, “Iraq exports rebound but oil price does
not,” Iraq Oil Report, 2/2/16
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