ERBIL, Kurdistan Region – Iraq’s oil export revenue tumbled last month, as oil prices continue to fall in a declining global economy – as OPEC attempts to counteract the decline with a nine-month extension of oil output limits.
Revenue fell from $7.38 billion in May to $6.4 billion in June, according to the Iraqi Ministry of Oil’s monthly published statistics. Barrel exports fell nearly 6 percent, from 111 million barrels in May to 105 million in June.
The average price per barrel sold last month was $60.58 — a huge reduction from its $66.68 mark in May.
The decline in revenue comes amid a fall in demand for oil during a global economic decline, as well as soaring oil output from non-OPEC member the United States – now the world’s top oil producer.
Brent Crude Oil had been trading internationally at around $70 per barrel in early May, but fell sharply to under $64 by the end of the month.
Prices did, however, rise to $65 upon news of an OPEC agreement on Monday to extend daily oil output cuts aimed at stabilizing oil prices for another nine months.
The agreement came after a G20 pact made by leading OPEC member Saudi Arabia and Russia, a non-OPEC member but oil supply powerhouse, last weekend.
The pact’s creation outside of OPEC space appeared to irk Iran, with Oil Minister Bijan Zanganeh warning that OPEC must not be "reduced to a rubber-stamp" for the ideas of others. Iran did, however, agree with the pact’s extension. It is also not subject to the cuts agreement, with its oil exports having already suffered critical blows due to US-imposed economic sanctions.
Despite the global economic situation, OPEC General Secretary Mohammed Barkindo expressed optimism that oil prices would, eventually, bounce back, aided by Monday’s agreement.
“There is no doubt in our mind that the decision that we took to extend the supply adjustment for another nine months well into the first quarter of next year with the strong commitment that we have seen in particular by the two largest producers – the Russian Federation and the Kingdom of Saudi Arabia […] the market will come back to its right course,” Barkindo told Rudaw after a press conference confirming the agreement at OPEC’s meeting in Vienna.
Even so, flailing export revenues do not bode well for an Iraqi economy so heavily dependent on oil and with plans for ambitious oil industry development.
Iraqi oil minister Thamir Ghadhban told the Iraq Petroleum conference in London last week that Iraq’s current production capacity is 5 million barrels per day (bpd) – far higher than the 3.52 million bpd exported last month - but that the country’s oilfields have yet to reach full production capacity.
“An estimated 2 million more barrels a day are to come from contracted south and central Iraqi oilfields,” Ghadhban said, with these oilfields already the source of the vast majority of Iraqi exports.
