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Iraq Raises Crude Exports Ahead of OPEC Meeting

Iraq Raises Crude Exports Ahead of OPEC MeetingIraq Raises Crude Exports Ahead of OPEC Meeting

Iraq will supply 5 million barrels of extra crude to its partners in June, industry sources familiar with the issue said, joining other Middle East producers by lifting market share ahead of an OPEC meeting this week.

The second-largest producer in the Organization of Petroleum Exporting Countries had already been targeting record crude export amounting to 3.47 million bpd next month from southern terminals, CNBC reported.

Saudi Arabia, Kuwait, Iran and the UAE also plan to raise supplies in the third quarter.

A recovery in global oil prices from 12-year lows to above $50 a barrel and rivalry between Saudi Arabia and Iran have dampened expectations that OPEC will rein in supplies at Thursday's meeting.

While additional exports could make up for shrinking output and supply disruptions elsewhere, the new supplies also risk delaying a rebalancing of a global market still awash with oil.

"OPEC is indeed increasing supplies, practicing their market share first strategy," said Victor Shum, managing director of downstream energy consulting at IHS, referring to a Saudi-led drive to boost OPEC's production to take back market share.

He said that additional oil from Saudi and Iraq may slow down a rebalancing of market, although this could be countered by supply disruptions from other places and strong seasonal demand.

Iraq's Oil Marketing Company allocated 5 million more barrels of Basra Light crude loading in June to upstream partners, including PetroChina, Eni and Lukoil, three sources familiar with the matter said.

Foreign companies are paid in oil under technical service contracts signed with SOMO, although payments have been delayed after the oil price drop squeezed Iraq's budget.

Financialtribune.com