Iraq’s revenue dropped 40% from February to March. It exported
an average of 3.39 million barrels a day each month, but prices went from
$51.37 per barrel in February to $32.73 in March. That resulted in profits going
from $5.053 billion in February to $2.989 billion the next month. That was the
lowest price since August 2016 when Iraqi petroleum went for $29.24. That was
also the least amount of money Iraq earned since $2.894 billion in March 2016.
The world energy market continually ebbs and flows. At the end of 2014 and the
close of 2015 the market hit two low points. Baghdad never plans for these
events even though it will be hurt the most as over 90% of its money comes from
petroleum. That’s because the elite rely upon oil money to maintain their power
and enrich themselves. They therefore have no impetus to change the economic
system in Iraq.
The lower oil prices mean Iraq is not earning enough money
to cover the its bills. It needs $3.5 billion a month for
its public workers, which is the largest part of the budget. Before that
however, it must pay $1 billion a month to the oil companies. More money is
required to pay for pensions, services and investments. The result is a huge
deficit with no plans for how to remedy it.
The reason why Iraq has no plans for how to deal with this
dual crises is because the country doesn’t have a prime minister. Adil Abdul
Mahdi resigned in November 2019 and the ruling parties have failed to agree
upon a replacement since then. That has led Baghdad to issue a number of
initiatives none of which offers a realistic answer to the country’s dilemma.
For instance, at the end of March the Basra Oil Company asked
energy companies to accept up to a 6 months delay in payments and cut their
budgets by 30%. Then the Oil Ministry said that it wanted
to boost oil output in April by raising production by 200,000 barrels a day
with the hopes of reaching 3.6 million barrels a day in exports. At the same
time it has cut its prices to its customers. Its Basra Light crude is being
offered to Europe at around $10
per barrel. It is also considering
dipping into the Central Bank’s $62 billion reserve of foreign currency. These
are all short term plans with no strategy behind them. Attempting to boost
exports when there is a glut in the energy market looks like an act of
desperation to try to make as much money as possible before prices dip even
lower. Of course trying to increase sales will only add to the current surplus.
Baghdad is also hoping that the cut in spending by the oil companies and not
paying them will not reduce their output, but that appears to be wishful
thinking as well given the global environment. Using the country’s foreign
reserves is another stop gap measure. Iraq is running such a large and growing
deficit that it might run through this account in around a year’s time. Even if
Iraq had a premier it might not do better. The country is notoriously bad at
planning and even worse at implementing. There is a massive austerity plan
heading Iraq’s way and massive borrowing as well. The sad thing is when the
energy market recovers Iraq will go right back to massive spending on useless
government workers until the next crisis hits.
Federal Oil
Exports, Prices, Revenues 2014-2020
|
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
|
2.98
|
$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
|
$4.079
|
|
Jan 2016
|
3.285
|
$22.21
|
$2.262
|
|
Feb
|
3.224
|
$23.00
|
$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
|
$6.234
|
|
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
|
$6.121
|
|
Nov
|
3.5
|
$59.82
|
$6.282
|
|
Dec
|
3.428
|
$63.05
|
$6.7
|
|
2019 Totals
|
3.527
|
$61.09
|
$6.543
|
|
Jan 2020
|
3.306
|
$60.14
|
$6.163
|
|
Feb
|
3.391
|
$51.37
|
$5.053
|
|
Mar
|
3.39
|
$32.73
|
$2.989
|
SOURCES
Abdul-Zahra, Qassim and Kullab, Samya, “Iran general visits Baghdad,
tries to forge political unity,” Associated Press, 4/1/20
Al-Ansary, Khalid,
“Iraq Seen Boosting Oil Output in April In Spite of Coronavirus,” Bloomberg,
3/31/20
Gebeily, Maya, “As
prices fall, what are the threats to oil giant Iraq?” Agence France Presse,
4/1/20
Katona, Viktor, “Iraq On The Brink Of Civil War As Oil Revenues
Evaporate,” Oil Price.com, 4/2/20
Iraq Oil Report, “March oil revenues drop sharply, but exports steady,”
4/2/20
Al Mada, “The
government floundering to provide salaries for employees after oil and Corona
flu,” 3/28/20
- “Late 2020 budget:
The deficit has reached 100 billion!” 3/30/20
Xinhua, “Iraq’s oil exports exceed 105 mln barrels in March,” 4/1/20
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