Economy News – Baghdad
Iraq’s oil production continues to exceed OPEC+-mediated target levels; despite the Arab country, along with Russia and Kazakhstan, handing over surplus crude production compensation plans to the Coalition’s General Secretariat for the first 6 months of 2024.
Baghdad, along with Moscow and Nur-Sultan, agreed to gradually reduce oil production by 2.284 million barrels per day from July 2024 until September 2025.
The total of this surplus was 1.184 million barrels per day from Iraq, about 480 thousand barrels per day from Russia, and 620 thousand barrels per day from Kazakhstan.
Iraq, OPEC’s second-largest oil producer, has made serious attempts to fully abide by any additional cuts in OPEC+ crude production, which would support the stability of the global crude market.
The OPEC+ alliance includes members of the Organization of the Petroleum Exporting Countries (OPEC), as well as Russia, Azerbaijan, Bahrain, Brunei, Malaysia, Kazakhstan, Mexico, Oman, Sudan and South Sudan.
Oil production in Iraq
Iraq’s oil production has again exceeded OPEC+-mediated target quotas during July (2024), as the government confirms the feasibility of policies supporting production reduction by the coalition, according to Argus Media.
The latest data released by the state company Somo, which specializes in marketing oil in Iraq, showed that the country’s crude production increased by 160,000 barrels per day, registering 3.99 million barrels per day during July 2024.
However, those figures did not include production from the autonomous Kurdistan Region of Iraq in the north of the country.
By adding oil production from the Kurdistan region, Iraq’s total oil production exceeds the OPEC+ target of 4 million barrels per day.
In June (2024), Iraq’s oil production touched 4.2 million barrels per day, compared to 4.1 million barrels per day (day) in May (2024), including nearly 250,000 to 300,000 bpd from the Kurdistan region, according to Argos estimates.
treatment plans
Iraq has not been able to meet OPEC+ oil production targets in any month during this year (2024).
Along with the two countries of Kazakhstan and Russia, members of the OPEC+ alliance, Iraq unveiled plans in June (2024) in which it revealed details of a mechanism it plans to take to compensate for the increase in oil production for OPEC+ quotas.
The increase in oil production in Iraq reflects higher exports, which partly offset a decrease in supplies to local refineries and reduced the burning of crude.
Crude exports from the South Basra oil plant touched an average of 3.486 million barrels per day (bpd) in July (2024), with a strength increase of 196,000 barrels per day, from 3.29 million bpd in June (2024), according to Sumo.
Oil supplies for domestic refineries also fell to 469,000 bpd in July (2024), from 475,000 bpd in June (2024).
Jordan did not receive any exports of Iraqi oil in July (2024), according to data from Somo, seen by the specialized energy platform.
However, the two Arab countries recently agreed to renew a crude supply agreement under which Baghdad would supply Oman with 15,000 barrels per day under preferential terms.
Oil consumption in Iraq
Iraq’s crude oil consumption touched 61,000 barrels per day to generate electricity in July (2024); a decline from the consumption rate in June (2024); attributed to the construction of the electricity interconnection line between Iraq and Turkey that will provide the Arab country with a capacity of 300 megawatts during the summer months, according to SUMO.
“In addition, network connectivity with Jordan and the increase in gas production and imports from Iran have all helped reduce dependence on crude oil,” she continued.
Baghdad has often pointed to the stalled efforts to compensate for OPEC+ overshooting Iraq’s oil production target, due to a lack of transparency on crude production from the Kurdistan Region.
Iraqi Kurdistan stopped providing production data following a dispute over the pipeline between Baghdad and Turkey that halted 400,000 barrels per day (bpd) of its exports in March (2023).
The Iraqi Oil Ministry has previously confirmed the ease of compensating the increase in oil production in Iraq from the OPEC+ target after the end of the summer season and the start of the decline in temperatures, in statements it made to Argos.
Countries that have not achieved their goals
In contrast to countries whose production shares have exceeded OPEC+ targets, a number of alliance members have not been able to meet their production targets in recent months.
Azerbaijan’s oil production touched 80,000 barrels per day (bpd), below its target of 550,000 bpd during the first 6 months of the year, and Malaysia’s crude production fell below expectations, by an average of 40,000 bpd over the same period.
Similarly, Sudan’s crude production fell to just 20,000 barrels per day, compared to pre-civil war levels of around 70,000 bpd.
South Sudan, which is fully dependent on Sudan for its exports, also recorded a decline in its crude production to more than half, as a result of the continued closure of Sudan’s main pipeline.
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Added 2024/08/10 – 1:09 PM
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