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| (CNN) |
In April 2020 Iraq’s oil revenues dropped by 50%. That was on top of a 40% decline the month before. This was due to the oil war between Saudi Arabia and Russia that oversupplied the globe and then the coronavirus which devastated demand. This is a huge blow to Iraq which is the most oil dependent country in the world.
In April,
Iraq exported an average of 3.48 million barrels a day. That was the highest amount of
the year, and the most since 3.5 million barrels in November 2019. The Oil
Ministry said that it wanted to boost exports during the month in an attempt to
earn as much money as possible while prices were collapsing. This was a short-term
plan that added to the glut in supply.
For the
month Iraqi crude sold for just $13.80 per barrel and earned $1.423 billion. For
2019 the country’s petroleum was selling for an average of $61.09 per barrel.
In January 2020 it went for $60.14, then $51.37 in February down to $32.73 in
March. Likewise, revenue started at $6.1 billion in January to $5 billion in
February to $2.9 billion in March. In just three months Iraq has seen its
profits drop by 76%. The country depends upon oil for almost all of its money.
It is now not making enough to pay its basic bills. It needs $1 billion a month just to pay the oil companies, and another $4 billion
for salaries, pensions, benefits, and welfare.
Iraq will
be facing more problems next month as well. May 1 was the start date of OPEC’s production cuts to try to stabilize supply. Iraq
agreed to reduce its output by 23%. To be able to achieve that the foreign oil
companies that operate the largest fields need to reduce
their operations,
but Iraq has not worked out any details with them yet. While the hope is
that prices will rally the lower exports will mean Iraq will be earning even
less. On the other hand, Iraq has never followed OPEC agreements and may not
fully comply with this one either. The bigger issue is that Iraq has a
caretaker government, which means no major decisions are being made. There are
no plans on how to deal with the oil crisis, which means things will largely
remain the same as the economy is collapsing around it.
Federal Oil Exports, Prices, Revenues 2019-2020
|
Month
|
Avg
Export (Mil)
|
Avg
Price
|
Earnings
(Bil)
|
|
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
|
3.391
|
$32.73
|
$2.962
|
|
Apr
|
3.48
|
$13.80
|
$1.423
|
SOURCES
Dipaola, Anthony, Cho, Sharon and Cang, Alfred, “Iraq Follows Saudi in
Cutting Oil Prices, Though Not as Deep,” Bloomberg, 3/10/20
Iraq Oil Report, “As Iraq begins oil cuts, steep challenges remain for
OPEC compliance,” 4/24/20
Kullab, Samya, “Iraq’s revenues plummet, raising fears of economic
collapse,” Associated Press, 5/1/20
Al Mada, “The government floundering to provide salaries for employees
after oil and Corona flu,” 3/28/20
Middle East Monitor, “Iraq begins reducing 23% of crude oil production,”
5/2/20
Mohammed, Aref, Rasheed, Ahmed, “Iraq faces problems cutting 1 million
bpd of crude output: sources,” Reuters, 4/30/20
Van Heuvelen, Ben and Lando, Ben, “Oil revenues crash, dragging Iraq
deeper into crisis,” Iraq Oil Report, 5/2/20
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