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Iraq's Oil Ministry confirmed recently that the country exported
more than 106 million barrels of crude oil in October, with
revenues having surpassed six billion USD. The results by IHS Markit Commodities at Sea
for October shipments from Iraq suggest a very similar story, with
total volumes having remained marginally below 3.5 million b/d last
month. There is a very interesting story for users of our tool, as
the Middle Eastern producer seems to have shipped much more than it
usually does to major importers such as China and India. After the
attacks in Saudi Arabia and the increasing concern around the time
it would take for the country to recover its production, other
producers across the Middle Eastern Gulf became much more popular.
Iraq seems to have quickly stepped in and sold crude oil to China
and India since late September, with the State Organization for
Marketing of Oil of Iraq adding that the average selling price for
crude oil in October reached USD 57.15 per barrel.
The market share of VLCC remained strong in October, with more
than 70% of volumes shipped last month loaded on large tankers,
while the share of Suezmaxes declined sharply month-on-month.
Charterers considered loading on Aframaxes instead of Suezmaxes due
to the increasing rates, in parallel to the rally observed in the
market after the US imposed sanctions on the COSCO fleet.
Meanwhile, some operators of Suezmaxes targeted other markets, such
as West Africa, providing more space for Aframaxes to step in and
further strengthen the trend developing.
Focusing on production, Iraq has been producing below its
capacity of almost five million b/d, following the production cut
agreement between OPEC and ten non-OPEC producers. These cuts have
already lasted much longer than earlier anticipated, in an effort
to support oil prices during a period of oversupply, primarily due
to the rapidly increasing production in the US. However, Iraq seems
to have been one of the countries, together with Nigeria and
Russia, which continue to pump marginally above their quota in
October. Their persistent failure to comply could either motivate
other members of the agreement to consider deeper production cuts
ahead of the OPEC+ December meeting or risk the balances between
participating countries. Iraq managed to reduce its output last
month, falling to 4.68 million b/d, which was still above its
commitment in the OPEC+ deal.
Meanwhile, the ongoing anti-government protest in Baghdad have
affected operations at Umm Qasr, a port primarily used for the
country's imports of grains and other foods, after protesters
blocked its entrance. Nearby offshore platforms exporting crude oil
have not been affected yet, but concern has been increasing about
the impact to be suffered in the country's oil industry. Protesters
have also tried to block roads leading to the Majnoon oilfield,
preventing employees from getting there.
Posted 11 November 2019 by Fotios Katsoulas, Liquid Bulk Principal Analyst, Maritime & Trade
