Iraq Seen Boosting Oil Output in April In Spite of Coronavirus

(Bloomberg) -- OPEC’s second-biggest producer plans to boost oil output in April, as the demise of a global production-cuts agreement frees it up to pump at will.

Iraq plans to raise output by about 200,000 barrels a day, reaching 4.8 million barrels a day in average production, according to a person with knowledge of the matter. The country would join Saudi Arabia, Russia and others in adding more barrels to a sated market amid a price war -- even as the coronavirus saps global demand.

Iraq will ship 3.6 million barrels a day in April, using its pipelines at maximum export capacity, the person said, asking not to be identified because the information isn’t public. By comparison, Iraq’s exports for March averaged 3.4 million as of Sunday.

The nation sees no constraints on its April shipments but may face issues if the pandemic persists and if customers’ storage tanks become full, the person said.

Iraq’s oil ministry didn’t immediately respond when asked to comment.

The Organization of Petroleum Exporting Countries failed earlier in March to persuade Russia to join it in making deeper cuts in output. The collapse of their coalition, known as OPEC+, has led to an oil-price war, and several producers are poised to uncork a torrent of new supply once their cuts agreement expires at the end of the month.

The relative shares of Iraq’s sales to Asia, Europe and U.S. haven’t been affected by the coronavirus. Asia is still Iraq’s largest regional market, and China remains its biggest single buyer, accounting for 800,000 to 900,000 barrels a day in March exports. Some refineries in China are increasing their processing as life starts returning to normal in some cities there, according to the person.

Iraq so far isn’t planning to fill storage tanks at the regional trading hub of Fujairah in the United Arab Emirates, the person said.

©2020 Bloomberg L.P.