Monday, November 18, 2019

Oil Exports And Revenues Decline For Iraq After OPEC Criticism

(Reuters)

Iraq’s oil exports dropped in October 2019 after it was criticized by OPEC for violating its production quota. In response the Oil Minister said he would reduce output, which in turn cut foreign sales.

In October, Iraq exported an average of 3.447 million barrels a day. That was down from 3.576 million in September and the record high of 3.603 million reached in August. For the year, Iraq has been averaging 3.5 million barrels a day.

The cause of the drop was Oil Minister Thamir Ghadban telling OPEC that Iraq would follow the organization’s production agreement. OPEC is trying to stabilize prices and got its members to agree to cut output. Iraq has never followed these deals, and reached an all time high in production in August. Iraq was criticized for that and the Oil Minister said that he would do a better job meeting the organization’s quota. The government reduced production at state run fields from 4.48 million barrels a day in August to 4.35 million in September as result.

Oil prices have also been declining after rising at the start of the year. In October a barrel of Iraqi crude went for $57.15 after going for around $60 from February to July. That resulted in Iraq earning $6.107 billion in October compared to $6.321 billion in September. That was the lowest monthly earnings figure since February 2018. Despite OPEC’s effort oil prices have been declining because of a glut in supply and fears of a recession. The problem this poses for Iraq is that the government is weak at budget planning. When oil prices go up it vastly increases its spending, mostly on government salaries, and then when the market inevitably drops Baghdad never plans for it leading to large deficits and increasingly international borrowing. The country refuses to learn from its past mistakes because the budget is a political deal not based upon economics.

Federal Oil Exports, Prices, Revenues 2014-2019
Month
Avg Export (Mil)
Avg Price
Earnings (Bil)
2014 Totals
2.517
$92.39
$7.017
2015 Totals
3.003
$44.81
$4.094
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
$6.234
2018 Totals
3.498
$65.61
$6.953
Jan 2019
3.649
$56.15
$6.367
Feb
3.621
$60.83
$6.179
Mar
3.377
$63.80
$6.709
Apr
3.466
$67.41
$7.021
May
3.572
$66.68
$7.329
Jun
3.52
$60.58
$6.372
Jul
3.566
$61.15
$6.692
Aug
3.603
$57.41
$6.413
Sep
3.576
$59.14
$6.321
Oct
3.447
$57.15
$6.107
2019 Totals
3.53
$61.03
$6.553

SOURCES

Iraq Oil Report, “Production falls as Iraq moves toward OPEC compliance,” 10/23/19

Lando, Ben, “Iraqi crude exports decline for second straight month,” Iraq Oil Report, 11/5/19

Reuters, “UPDATE1 – Iraq Oct oil exports from southern ports avg 3.34 mln bpd – ministry,” 11/1/19

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