Iraq, second largest oil producer in OPEC, will follow the example of other members of the cartel will increase oil exports in June to 5 million bbl./day that had been planned earlier to 3.47 million barrels./day told Reuters sources in the industry. Earlier plans to double exports in the third quarter announced by Saudi Arabia, Kuwait, Iran and UAE.
On the one hand, an additional proposal will be able to offset the decline in production and disruptions in supplies from other countries; on the other, it threatens to slow down the rebalancing of the global market, where there is still a glut of oil.
The recovery of prices of Brent crude oil 12-month lows to more than $50/barrel. as well as the competition between Saudi Arabia and Iran worsened expectations that the results of the next OPEC meeting scheduled for June 2, the cartel will be able to reach a “freezing” of production.
“OPEC is really ramping up supply, the first step in defending their market share”, — said the Agency Viktor Noise, head direction downstream in the consulting company IHS. According to Noise, additional supply of oil companies from Saudi Arabia and Iraq may slow down the rebalancing of the global market. Thus, it can compensate for disruptions in supplies from other countries, as well as high seasonal demand.
Iraqi trading company Iraq’s Oil Marketing Company (SOMO) reserved for June shipment of oil in the amount of 5 million bbl./day. various customers, including PetroChina, Italian Eni and Russian LUKOIL, told the news Agency, three sources familiar with the plans SOMO.
Iraq is paying to foreign oil companies under contracts for technical services (WHO). After falling prices hit the budgets of the country, deliveries were deferred. According to sources in the industry, the decision on increase of export was made “under pressure from contractors WHO. Iraq is also obliged to observe the schedule of the settlement with the counterparties under the terms of the tranche, which the country agreed to allocate the IMF.
Additional volumes of oil Iraq can put in the result of growth in deposits, Lukas and artawi areas in the South of the country. Overall, Iraq plans to increase oil production by a third by 2020.
The source said one of the contractors, SOMO, additional crude oil Basra Light, which was exhibited by the trader for sale, left two hours later after a proper notice — evidence that the demand for Iraqi oil remains high amid expectations of increasing official prices in July. In this case the prize for June delivery spot parties from Iraq decreased to $0.4 to 0.8/bbl. against $1 in may in terms of increasing export volumes and raising the June official selling price, said the Agency traders.