Iraq Oil Tops 3 Million Barrels for First Time Since 2002
Iraq’s crude output rose above 3 million barrels a day last month for the first time since the 2003 U.S.-led invasion that toppled Saddam Hussein, according to the Organization of Petroleum Exporting Countries.
Iraq pumped 3.08 million barrels a day in July, 115,000 barrels more than the previous month, OPEC’s Vienna-based secretariat said today in its Monthly Oil Market Report. The Persian Gulf state for a second month outpaced Iran, where output dropped by 173,000 barrels to 2.82 million. Iraq last produced more than 3 million barrels in February 2002, OPEC said after revising its April estimate.
The reduction from Iran came as full sanctions by the European Union started July 1, which led to the third monthly decline in the group’s output. OPEC, which supplies 40 percent of the world’s oil, produced 31.2 million barrels a day last month, versus 31.35 million in June, according to the data, which cites secondary sources.
Iraqi production is increasing as overseas investors such as Exxon Mobil Corp. (XOM) and BP Plc develop new fields and rework older deposits. The country has held several licensing rounds for oil and natural gas fields since the end of Saddam Hussein’s rule and more than two decades of stagnation caused by wars, sanctions and underinvestment.
The country’s production increased the most among OPEC’s 12 members in July. Kuwait boosted supply by 26,000 barrels a day. All others reduced or kept their output stable. Iranian volumes dropped the most.
“At this juncture, we remain prudent on the pace of Iraq’s growth, as logistical capacity has to grow as well to deliver more oil,” said Harry Tchilinguirian, BNP Paribas SA’s head of commodity markets strategy in London. “They are probably not operating at capacity because pipeline availability to deliver oil to the southern export ports is limited.”
Bottlenecks for shipments from southern Iraq, where energy companies are making most of their investments, are easing with the start of two offshore mooring facilities for supertankers. Exports will be capped at 300,000 barrels a day given infrastructure constraints, compared with planned capacity of 1.8 million, the IEA said in May.
Another obstacle to Iraq reaching its aim of doubling output by 2015 is a dispute over sharing oil revenue with the country’s semi-autonomous Kurdish region, which could hurt investment in the area, according to Samuel Ciszuk, an analyst at consultant KBC Energy Economics in Walton-on-Thames, U.K. Exxon, Chevron Corp. (CVX) and Total SA (FP) flouted warnings by the government and reached separate deals with the Kurds.
Iraq’s Kurdistan Regional Government resumed exports this month as a goodwill gesture to help end a suspension in place since April 1 because of the payment dispute with the central government. Oil companies operating in the Kurdish north will resume flows at a rate of 100,000 barrels a day for one month, and may double shipments if they receive payments for the crude under prior arrangements, the KRG said Aug. 1.
“Growth should have been higher had the KRG continued its exports,” said Ciszuk. “These oil companies operating in the north need to monetize their oil.”
Rising Iraqi production has helped OPEC’s de facto leader Saudi Arabia, which ramped up production this year as sanctions against Iran curtailed that nation’s operations. Iraq’s output last exceeded Iran’s in 1988, when the countries ended their eight-year war, statistics compiled by BP show.
Saudi Arabia, the world’s largest crude exporter, pumped 9.875 million barrels a day in July, versus 9.926 million in June, OPEC said, citing secondary sources. Saudi Arabia reduced its output by 300,000 barrels a day to 9.8 million, from the highest in more than three decades in June, according to data the kingdom provided directly to OPEC.
Falling OPEC production last month coincided with a 7.3 percent increase in Brent crude on the ICE Futures Europe exchange. Brent traded 0.2 percent higher at $112.35 a barrel at 12:16 p.m. in London.
OPEC’s members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.