In June 2020 Iraq had the lowest average oil exports in five years as it attempted to meet its OPEC quota. Prices also rose for the second straight month. That wasn’t enough to meet the country’s budget requirements however.
In June Iraq exported an average of 2.816
million barrels a day of oil. That was the lowest average since 2.7 million
in October 2015. In April of this year, Iraq made an annual high of 3.438
million barrels. Exports have dropped since then as Iraq has slowly but surely
cut production to try to meet its agreement with OPEC to try to stabilize the
energy market. This was accomplished by talks with some of the major foreign
energy companies to cut their
output from southern oil fields.
The OPEC production quota for Iraq was 3.592
million barrels a day. In May it was the worst violator of the agreement
making 4.19
million barrels. Baghdad didn’t release production figures in June but Iraq
Oil Report estimated it was pumping between 3.6 to 3.8 million barrels a day. That
showed Iraq was making steady progress towards complying.
The moves by OPEC and the opening up of several parts of the
world during the Covid-19 pandemic has stabilizing supply and demand a bit. That
resulted in prices going from a low of $13.80 per barrel for Iraq in April to
$21 in May and $33.86 in June. That earned Baghdad $2.861 billion in June up
from $2.091 billion the month before. That’s still far too low for the
government which needs to be selling its petroleum at $50-$60 per barrel to
meet its budget. It needs $1 billion a month to pay the oil companies and $5
billion a month for salaries and pensions alone.
The government will be issuing
bonds to borrow from local banks and is in talks
with the International Monetary Fund for a loan to cover its costs. Prime
Minister Mustafa Kazemi has made no serious proposals for cutting spending yet.
That’s because government jobs and pensions are controlled by the ruling
parties that hand them out in patronage networks to maintain their support.
They are opposed to any reductions in either and that is the largest part of
the budget. There is also the general belief that oil prices will eventually
rise, so this is only a temporary crisis. Finally, Iraq has consistently failed
at strategic planning, so even in the midst of crises it never adequately
responds.
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
|
|
Jun
|
2.816
|
$33.86
|
$2.861
|
SOURCES
Al-Ansary, Khalid,
“Iraq Seeks IMF Loan, Saudi Investments to Boost Oil-Battered Economy,”
Bloomberg, 7/1/20
Iraq Oil Report,
“Parliament passes $18 billion emergency financing law,” 6/26/20
Al-Jabiri, Jassim
and Porter, Lizzie, “Iraq questions fairness, but closes in on OPEC-plus
target,” Iraq Oil Report, 6/15/20
Lando, Ben, “Iraq
exports plunge toward OPEC compliance,” 7/2/20
Al Masalah, “Oil
Ministry reveals oil exports during last June: 84 million barrels, with
revenues exceeding $2 billion,” 7/1/20
Reuters, “UPDATE
1-Iraq agrees with oil companies on deeper output cuts in June- sources,”
6/14/20
Saadi, Dania
Carpenter, Claudia, “IRAQ DATA: Oil exports fall 12% in June after pledge of
better OPEC+ compliance,” S&P Global, 7/1/20
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