Oil Export, OPEC Cut Effects and Budget Implications

Oil Export, OPEC Cut Effects and Budget Implications

Monthly data during the first half of this year are important for Iraq for two main reasons: they reveals the test of OPEC-cuts and how Iraq is actually comply with and affected by them; and the second is the budgetary implications as far as its main thresholds: oil exports, oil prices, oil revenues and KRG oil delivery commitments.

While international business, banking and financial entities, energy consulting firms, media sources among other began a wave of reporting, estimating, speculating reports on these issues, nothing of substance on these issue came from the Ministry/Minister of Oil until SOMO released today its January export data.

As it is known, SOMO monthly reports are released, since 2008, and focuses mainly on oil export volume, oil revenues and average oil price. But such monthly report does not cover oil production and does not cover KRG production and exports; and since the Ministry has imposed anti-transparency environment by terminating the publication of data on oil production and its allocation since September 2016, I used reputable international sources to acquire the missing data.

This brief intervention has three parts:

1. First part provides assessment of oil export performance for 2016 and concluding that due to lower oil prices and oil exports had resulted in more than 26% deficit in the budgeted oil export revenues.

2. The second focuses on January oil export and its implication for budget 2017; concludes that first month of OPEC accord worked contrary to Iraq’s interest and, thus, warns against any call based on non-consolidated improvement of oil prices while ignoring the whole picture.

3. The third part assesses Iraq compliance with OPEC cut of November 2016 through different sources of estimation and raises the possibility missing significant volume of oil produced during January.

Finally, the paper concludes by requesting the Ministry/Minister of Oil to clarify any ambiguities by making full, accurate and transparent disclosure of data and give convincing explanation; and stands against unjustified early revision of the state budget.

(Source: Iraq Business News)

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