28-11-2018

Iraq finalizes 2019 crude oil term deals, 67% to go Asia

Iraq has finalized its 2019 crude oil term contracts with 67% of its exports poised to go to Asia, an oil ministry spokesman said Tuesday.

“The percentage of the total quantities of the total quantities planned for export next year 2019 for the Asian market (67%) and the European market (20%) and the US market (13%),” the spokesman, Assem Jihad, said in a statement.

Jihad said the ministry approved the allocation of quantities for the contracts handled by Iraq’s State Oil Marketing Organization. The deals involve the exports of Basrah Light, Basrah Heavy and Kirkuk crude. The ministry did not give further details on the term contracts.

This announcement comes as regional demand for Iraq’s medium sour crude has grown due to the loss of Iranian supply because of US sanctions.

Iraq has recently been trying to clamp down on where customers are taking its oil.

SOMO has gradually become less flexible in its term contracts, hoping to diminish the influence of traders and control the sales of its crude to only refineries and end-users. This has in effect reduced spot trading in Iraqi crude.

RISE IN CRUDE EXPORTS

In mid-November, the federal government of Iraq restarted exports of Kirkuk crude through the Kurdistan-Turkey pipeline in mid-November, paving the way for a rise in loadings from OPEC’s second-largest producer.

Including output from the semi-autonomous Kurdistan region, Iraq produced 4.62 million b/d in October, according to the latest S&P Global Platts OPEC survey, a rise of 270,000 b/d from October last year, driven by an increase in its southern exports.

Exports have been rising significantly since OPEC and 10 non-OPEC allies on June 23 agreed to ease compliance with quotas. Iraq’s total exports hit an all-time high of 4.008 million b/d in August, and loadings especially from its southern terminals rose sharply this year.

Of the crude exported by the federal government through the southern terminals, around 75% has been of the Basrah Light grade, with an API gravity of 29-31, while 25% has been Basrah Heavy of API gravity 23-24.

Source: Platts

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