Monday, January 7, 2019

Iraq Reaches New Record High In Exports As Oil Prices Sharply Decline

(Modern Diplomacy)

After a spate of bad weather at the start of the winter the seas cleared and Iraq’s southern ports in Basra were back at capacity. That along with a new agreement between Baghdad and Irbil to use the latter’s pipeline to Turkey resulted in a new high in Iraq’s oil exports. The problem was this came as petroleum prices took a large hit.

Iraq recorded a new high in oil exports in December 2018. It averaged 3.726 million barrels a day, up from 3.377 million in November and 3.478 million in October when poor weather made it hard for ships to dock in Iraq’s Basra ports. The previous high was 3.58 million barrels in August. The country finished the year averaging 3.498 million barrels a day, a new record as well. Back in 2014 Iraq had an annual average of 2.517 million barrels, going to 3.003 million in 2015, hitting a plateau of 3.3 million in 2016-17, before new infrastructure opened up to allow for the increase in 2018.

The bulk of those exports travelled through Basra that shipped an average of 3.627 million barrels in December. A new agreement with the Kurdistan Regional Government also allowed 99,000 barrels a day to be sold via Turkey. The flow through the pipeline was at 76,000 barrels a day, while the rest was taken from storage. That was up from 8,700 barrels a day in November when the two sides initially made the deal.

The new high and flow to Turkey were up ended by a large drop in oil prices. Worries about slowing economies and excessive supply led the price of a barrel of Iraqi crude to go from $73.38 in October to $61.09 in November to $52.80 in December. Iraq ended with an annual average of $65.61 per barrel. Figures are incomplete for 2016 and 2017, but back in 2014 Iraqi oil was selling for over $100 a barrel before the oil market collapsed leading to an average of $44.81 in 2015. Prices have been climbing upwards since the end of 2017, but the market could be facing new instability as it enters 2019. This is the dilemma Iraq faces having its whole economy and government linked to a volatile commodities market.

Iraq earned $6.1 billion as a result in December, the lowest since $5.77 billion in February. At the end of the year Iraq earned an average of $6.953 That was the most since $7.017 million per month in 2014.

In January a new production quota will be set by OPEC to try to stabilize prices. Iraq said it would follow the new agreement, although it cheated throughout the last deal by the organization attempting to boost its production and exports as high as it could. If the markets are volatile in the new year it will be interesting to see if Iraq actually follows through this time or whether it continues to follow its own path, and whether that undermines its effort by further lowering prices.

Federal Oil Exports, Prices, Revenues 2014-2018
Month
Avg Export (Mil)
Avg Price
Earnings (Bil)
Jan 2014
2.228
$102.37
$7.073
Feb
2.799
$102.05
$7.9
Mar
2.396
$101.03
$7.507
Apr
2.51
$100.69
$7.582
May
2.58
$100.69
$8.077
Jun
2.423
$102.96
$7.47
Jul
2.442
$102.27
$7.8
Aug
2.375
$97.44
$7.172
Sep
2.542
$90.76
$7
Oct
2.461
$81.12
$6.19
Nov
2.51
$70.40
$5.238
Dec
2.94
$57
$5.195
2014 Totals
2.517
$92.39
$7.017
Jan 2015
2.535
$41.45
$3.258
Feb
2.597
$47.43
$3.449
Mar
2.980
$48.24
$3.449
Apr
3.077
$51.70
$4.8
May
3.145
$55.87
$5.447
Jun
3.187
$55.32
$5.289
Jul
3.105
$50.99
$4.908
Aug
3.079
$40.59
$3.925
Sep
3.052
$40.32
$3.725
Oct
2.703
$39.56
$3.29
Nov
3.363
$36.42
$3.66
Dec
3.216
$29.84
$2.92
2015 Totals
3.003
$44.81
$4.094
Jan 2016
3.285
$22.21
$2.262
Feb
3.224
$23
$2.249
Mar
3.287
$28.40
$2.894
Apr
3.363
$33.38
$3.368
May
3.2
$37.78
$3.748
Jun
3.175
$40.36
$3.845
Jul
3.203
$38.28
$3.802
Aug
3.229
$29.24
$3.928
Sep
3.276
$38.89
$3.822
Oct
3.384
-
$4.426
Nov
3.47
$40
$4.216
Dec
3.52
-
$5.074
2016 Totals
3.302
-
$3.625
Jan 2017
3.321
-
$5.002
Feb
3.270
-
$4.514
Mar
3.258
$47.18
$4.766
Apr
3.253
$47.27
$4.607
May
3.261
$47
$4.623
Jun
3.273
$42.07
$4.144
Jul
3.230
$43.80
$4.386
Aug
3.216
-
$4.608
Sep
3.24
-
$4.882
Oct
3.346
$52.59
$5.456
Nov
3.502
$59.19
$6.021
Dec
3.535
$59.35
$6.504
2017 Totals
3.309
-
$4.959
Jan 2018
3.490
$63.29
$6.847
Feb
3.426
$60.14
$5.770
Mar
3.453
$59.95
$6.418
Apr
3.340
$64.60
$6.502
May
3.489
$69.80
$7.551
Jun
3.521
$69.32
$7.323
Jul
3.544
$69.16
$7.532
Aug
3.583
$69.65
$7.735
Sep
3.56
$74.15
$7.919
Oct
3.478
$73.38
$7.908
Nov
3.377
$61.09
$6.195
Dec
3.726
$52.80
$6.1
2018 Totals
3.498
$65.61
$6.953

SOURCES

Rasheed, Ahmed, “Iraq’s oil exports rise to 3.73 million bpd in December: oil ministry,” Reuters, 1/2/19

Van Heuvelen, Ben and Lando, Ben, “Iraq finishes 2018 with record-breaking exports,” Iraq Oil Report, 1/3/19

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