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Iraq Boosts Oil Sales Ahead of OPEC Accord

Iraq Boosts Oil Sales Ahead of OPEC AccordIraq Boosts Oil Sales Ahead of OPEC Accord

Iraq is selling more crude oil to its biggest customer, China’s Unipec, people familiar with the matter say, digging a deeper foothold in the global supply market just before production cuts agreed with OPEC and other producers are scheduled to kick in.

With new deals with Indian and US refiners also coming on stream, the expanded contract with the trading arm of Asia’s largest refiner Sinopec means Baghdad will have to reduce supply to other clients to honor its commitment to cut output by 210,000 barrels per day from 2017, Reuters reported.

Three people with knowledge of the matter said the Unipec contract was signed just before the Organization of Petroleum Exporting Countries, of which Iraq is a member, agreed with other producers led by Russia to cut output by as much as 1.8 million bpd in an effort to reduce a global fuel supply overhang and prop up prices.

Speaking on condition of anonymity because they were not authorized to speak to media, the people said Iraq’s Oil Marketing Company (SOMO) has boosted Basra crude forward export sales to Unipec by 3% to a total of 40 million-60 million barrels each quarter - 435,000-652,000 bpd - for 2017.

“If Iraq increases its sales to China while others have to cut back or just hold their volumes steady, Iraq will inevitably gain market share in what is arguably the most important oil market,” said a trader who specializes in sending crude to China but is not allowed to speak publicly.

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