Iraq’s Rising Crude Sales Signal Further Lag on OPEC+ Quota
(Bloomberg) -- Iraq is exporting more crude so far in September than it shipped last month, a sign that the country is falling further behind in efforts to comply with its OPEC+ production limit.
A long-time laggard, Iraq already owes its partners in the producers’ group compensation cuts to make up for pumping too much in past months. With these extra reductions that Iraq promised for August and September, its production goal would be about 3.4 million barrels a day.
In the first 15 days of September, Iraqi exports alone reached 3.26 million barrels a day, 8% higher than last month’s daily average, according to tanker tracking data compiled by Bloomberg. Adding as much as 650,000 barrels a day of crude to account for Iraqi refinery use would put OPEC’s second-biggest producer well over its production limit.
Sixty years on from its founding, the Organization of Petroleum Exporting Countries is restricting output with other major producers to try to revive the oil market from the Covid-19 demand crisis. Saudi Arabia and Russia, leaders of the OPEC+ coalition, are chairing a monitoring meeting on Thursday to make sure group members toe the line, so the timing of data suggesting rising exports from Iraq is awkward. Earlier this month, Iraq said it might need more time to implement its promised additional production cuts.
Iraq pumped 3.72 million barrels a day in August, according to a Bloomberg survey. Iraq’s oil ministry and its state oil marketer didn’t immediately respond to requests for comment.
Crude prices have slipped since the end of August on concern that coronavirus flare-ups will slow a recovery in demand and that OPEC+ compliance may be slipping. Brent crude was trading at $41.65 a barrel at 7:05 a.m. in London on Thursday.
OPEC was already facing compliance questions concerning the United Arab Emirates, which pumped at least 100,000 barrels a day more than it should have in August. Other estimates pegged the UAE’s over-production at more than that, though the Gulf nation has signaled that it will make up for pumping too much by chopping shipments in October and November.
Tanker tracking can shed light on how much oil a country is producing. However, countries may sell barrels from storage, and those don’t count toward output limits. Producers also sometimes mix other petroleum products into the crude they ship, inflating their export numbers.
The daily average provided by preliminary tanker tracking may also change over the month because shipments are not always spread uniformly over the period.
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