Oil Prices Start To Recover But Still Too Low For Iraq

(Oil & Gas)

A new OPEC agreement to cut production and the loosening of coronavirus restrictions has led to a slight recovery in the oil market, but prices are still too low to cover the Iraqi budget.

 

In May Iraq exported an average of 3.212 million barrels a day of oil. That was down from 3.427 million barrels in April and the lowest amount since July 2016 when it sold 3.203 million barrels a day. This figure should go down even more in the next month or two if Iraq follows through with its planned cuts to production to follow a new OPEC agreement.

 

The OPEC deal has helped stop the free for all in the energy market. Iraqi crude sold for $21.00 per barrel as a result, up from just $13.80 in April. That led Iraq to earn $2.092 billion compared to $1.423 billion in April. That’s still nowhere near enough to cover Iraq’s budget. The government needs $1 billion just to pay oil companies and another $5 billion to cover public salaries. To make matters worse Baghdad has proposed no serious reforms to lower its spending and looks to be focused upon borrowing in the short term in the hopes that everything will return to normal eventually. The lack of realistic strategic planning and implementation has been a shortcoming of Iraq since 2005 and faced with the biggest crisis in years has not changed that.

 

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	3.438	$13.80	$1.423
May	3.212	$21.00	$2.092

 

SOURCES

 

Lando, Ben and Van Heuvelen, Ben, “Iraq’s May exports exceed its OPEC production quota,” Iraq Oil Report, 6/3/20

 

NRT, “Iraq Brings In $2.09BN In May From Oil Exports, But Misses OPEC+ Cut Goal,” 6/2/20

 

Wali, Zhelwan, “Iraq’s flailing oil sector sees May revenue increase,” Rudaw, 6/1/20