Iraq Gets Serious on Oil Cuts By Asking Buyers to Forgo Cargoes
Iraq Gets Serious on Oil Cuts By Asking Buyers to Forgo Cargoes
(Bloomberg) --
Iraq has asked some Asia refiners to consider forgoing prompt shipments of its Basrah crude, a potential signal the country is trying to meet the output-cut pledges it made to OPEC at the weekend.
State-owned marketer SOMO sent requests to several customers asking if they would consider not taking some contracted cargoes for June and July loading, said people with knowledge of the matter. At least one buyer was unwilling to forgo shipments citing downstream commitments, while another will likely agree and seek replacement cargoes in the spot market, the people said.
Suppliers such as Iraq and Nigeria that have traditionally been lax at complying with output curbs are coming under increased scrutiny following the latest OPEC+ agreement. The alliance agreed to extend record output cuts for another month on condition that Baghdad doubles down on efforts to rein in production and also makes up for previous non-compliance.
Nobody responded to emails and text messages sent to SOMO seeking comment. The company typically sells two grades -- Basrah Light and Basrah Heavy -- to Asian customers in 1 million or 2 million-barrel shipments.
Efforts by OPEC+ and involuntary supply cuts in the U.S. have been instrumental in helping oil prices recover from virus-induced lows in April. However, there’s speculation the rally could be stymied as the speed of the rebound entices producers to raise output before demand fully recovers.
Iraq will be fully committed to the OPEC+ agreement, the country’s oil ministry said in a statement. The nation produced 4.2 million barrels a day in May, about 15% more than it was meant to under the previous OPEC+ deal struck in April. Iraq is set to release its official selling prices for July-loading crude exports in the coming days. Earlier, Saudi Aramco hiked official selling prices for all grades in a move that shocked buyers across Asia.
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