Oil tankers shipped the most crude from Iraq in six months in May, when Opec’s second-biggest producer was negotiating with the group’s other members to persist with supply constraints to shore up the global market.
Tankers loaded 122mn barrels of Iraqi crude at ports in the Gulf and Mediterranean Sea last month, according to vessel-tracking and shipping agent data gathered by Bloomberg. The daily outflow of 3.93mn barrels was just shy of the record, set in November, and exceeded that of October, the baseline month for cuts by the Organisation of Petroleum Exporting Countries.
Ambitious goals to keep expanding its output capacity, coupled with an economy that’s still reeling from decades of bloody conflict, mean Iraq is among the most closely monitored nations for compliance to Opec’s curbs. Along with Russia and other non-member oil suppliers, the exporter club is seeking to shrink a crude glut that’s holding prices at about $50 a barrel, less than half where they were three years ago.
“Iraq is the big one in terms of growing production and not having too much inclination to cut,” said Robin Mills, head of Dubai-based consultancy Qamar Energy. “Out of the Opec members, it’s the one to watch.”
The country’s state oil marketing company, known as SOMO, sells crude via the southern port of Basra in the Gulf as well as through a pipeline to Turkey. The semi-autonomous Kurdistan Regional Government independently ships oil that it produces at fields in the north of the country via Turkish ports. The flows captured by tanker tracking are for both.
Sales from federally operated fields excluding those from the KRG averaged 3.262mn bpd, the Oil Ministry in Baghdad said on Thursday. Tanker tracking shows those flows for that oil at 3.31mn bpd.
Exports from neighbouring Iran also surged in May, reaching 2.2mn bpd, compared with 1.82mn in April, according to ship-tracking data compiled by Bloomberg. Shipments from Libya, unbounded by Opec restrictions, are at a 2 1/2 year high.
Opec’s production limits took effect in January, initially for a period of six months, with Opec and partners agreeing May 25 to another nine months of reductions. While it could be because of extra output, Iraq’s gain in May can also be explained in part by catching up on reduced flows in April, when a damaged jetty was under repair.
Iraq agreed in the Opec deal to cut output by 210,000 bpd from its October level. While exports are not a perfect match for output, the market watches them closely to get an idea of production. Iraq doesn’t have the same capacity to store crude as some other producer nations, meaning that what’s pumped out of the ground is piped relatively quickly onto ships.
Flames emerge from flare stacks at the oil fields in Basra. Tankers loaded 122mn barrels of Iraqi crude at ports in the Gulf and Mediterranean Sea last month, according to vessel-tracking and shipping agent data gathered by Bloomberg.