03-05-2016

Iraq Oil Exports Near Record as Baghdad Protests Intensify

IraqOil

Iraq’s oil exports approached a record high in April, adding barrels to a worldwide supply glut, even as protests against public corruption threatened to paralyze the government of OPEC’s second-largest producer.

Shipments rose to 3.36 million barrels a day, or 100.92 million barrels for the month, Asim Jihad, a spokesman at the oil ministry, said by text message Sunday. The figures don’t include Kurdistan Regional Government exports. The exports rose from 3.29 million barrels a day in March and were close to the November all-time high of 3.365 million barrels a day, according to oil ministry figures.

Oil shipments and production were not affected Sunday after protesters stormed parliament in Baghdad, Falah Al-Amri, chairman of Iraq’s State Oil Marketing Organization, said by Facebook message. Government forces are struggling in the fight against Islamic State militants as a plunge in oil prices of more than 50 percent in the last two years has battered its finances.

“Politically, things have worsened dramatically in Iraq,” Richard Mallinson, an oil analyst with Energy Aspects Ltd., said Sunday by phone from London. “It’s a negative for the country’s oil industry over the medium term. We’re going to see production plateau and start to decline later this year,” he said, as government turmoil and spending cuts affect projects needed to maintain output.
Southern Fields
Iraq produced 4.3 million barrels a day in April, data compiled by Bloomberg show. Output has increased from 3.25 million barrels a day two years ago with companies including BP Plc and Lukoil PJSC boosting production at fields they operate in the south of the country.

The government declared a state of emergency in Baghdad after supporters of Shiite Muslim cleric Moqtada al-Sadr stormed parliament to protest against corruption and the country’s political paralysis. The action on Saturday increases “the social and political risk that will have to be factored in to assessing Iraq,” said Edward Bell, a commodities analyst at lender Emirates NBD PJSC in Dubai. “If this lasts it could contribute to the upside for oil.”

Benchmark Brent crude gained 22 percent in April for a third monthly gain. Brent contracts for July settlement traded as high as $48.29 a barrel on April 29 in London before ending the session at $47.37.

Mallinson and Bell both said they didn’t expect the unrest in Baghdad to cause any immediate interruptions in production or exports of oil from southern Iraq. Most of Iraq’s crude reserves and all of its maritime export terminals are located in the south, away from the front lines in the military campaign against Islamic State.

The country has lost sales and revenue from its northern region as a payments dispute with the semi-autonomous Kurdish region and interruptions to the flow of oil for export through a pipeline to Turkey have crippled shipments.

Source: Bloomberg

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