Baghdad Unfazed by Tehran Oil Return

Baghdad Unfazed by Tehran Oil ReturnBaghdad Unfazed by Tehran Oil Return

Iraq’s plan to increase oil output this year will go ahead, with exports running in January at a record level and unaffected by Iran’s return to the market, Iraqi Oil Minister Adel Abdul Mahdi said on Thursday.

Iraq, OPEC’s second-largest producer, expects output from the country's southern region to increase by up to 400,000 barrels per day this year to over 4 million bpd, he said during an interview in Baghdad. Iraq also produces oil from the north but revenues from those sales go to the Kurdish self-ruled region, not the central government in Baghdad. The north produces more than 600,000 bpd, Reuters reported.

Baghdad will be offering competitive prices to market its additional crude output, the minister said, adding that it has signed contracts with Chinese refineries covering all of 2016.

"In fact, we in Iraq are not short of contracts," he said. "Until now, the demand on our oil is more than our offer, even with the return of Iran."

The United States, the European Union and the United Nations lifted most sanctions on Iran last week, removing restrictions on Iranian oil sales under a deal in which Tehran agreed to curbs on its nuclear program.

"Iraqi oil will remain cheap for China. Our 2016 term contracts are fully booked," he said. "The average cost of extraction in southern Iraq is about $10 per barrel."

Crude prices have sunk to below $30 a barrel, from more than $100 two years ago, amid a global glut fueled mainly by rising production of North American shale oil.

Saudi Arabia, OPEC's top producer, led a move by the organization to preserve its market share, rejecting calls by some members, including Algeria and Venezuela, to cut output to boost prices.