Iraq braces for higher oil demand

Iraq is already planning crude oil shipments for delivery in March thanks to strong demand, the deputy head of the State Petroleum Marketing Organization, or SOMO, told media in Baghdad, as cited by Reuters.

Ali Nizar also told the media that Iraq’s oil exports were flat this month and will be slightly higher next month, Bloomberg reported.

For this month, the average daily rate of exports is estimated at 3.2 million bpd, said SOMO’s deputy general manager, adding that it would likely increase to 3.3 million bpd in February. These are figures for Iraq proper only, excluding exports of 340,000 bpd from the Kurdistan Autonomous Region.

Asked about oil prices, the SOMO official declined to give a specific projection, saying it was too early to tell whether benchmark crude would hit $100 a barrel.

Separately, however, Reuters reported last week that some OPEC members believed oil could indeed reach and even exceed $100 a barrel. The drivers of a continued rally would be sustained demand and tight supply resulting from the cartel’s limited spare capacity.

The last time Brent traded at $100 and above was eight years ago. During this cycle, Brent reached $110 a barrel before falling below $50 in January 2015.

“There will be increasing pressure on oil prices at least in the next two months,” an OPEC source told Reuters, adding: “Under these circumstances, the price of oil could be close to $100 but it certainly won’t be very stable.”

Due to various constraints, OPEC has been below its own production targets for months. In December, the cartel reported an increase in production of barely 170,000 bpdwhile its quota called for an increase of 253,000 bpd, in line with the OPEC+ production control agreement which stipulates a production increase of 400,000 bpd for the extended cartel.

By Irina Slav for Oilprice.com

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Felix J. Dixon