Price Collapse Halves Iraq’s Oil Revenues

Iraq saw its oil revenues cut nearly in half in March when oil prices collapsed, even though OPEC’s second-largest producer exported more barrels of crude last month than it did in February.

According to data from Iraq’s oil ministry, cited by AFP - Agence France Presse, Iraq’s crude oil sales amounted to 105 million barrels in March. For these barrels, Iraq earned a revenue of US$2.99 billion. To compare, Iraq’s February sales of 98.3 million barrels of crude oil earned OPEC’s producer almost twice that, at US$5.5 billion.

The federal government of Iraq sold its 3.390 million bpd of oil exports at an average price of $32.73 a barrel, Iraq Oil Report quoted the oil ministry as saying.

Iraq’s oil typically trades at around $4 a barrel discount to Brent, so in the past couple of weeks, Iraq’s crude oil was selling for $21 a barrel, Oil Minister Thamer Ghadban told local media, AFP reports.   

Last week, Iraq, one of the oil producers worst hit by the oil price crash, was said to be proposing that all foreign oil firms operating in the country cut their budgets by 30 percent on the condition that crude production levels do not suffer.

Iraq, which relies on oil revenues for 95 percent of its budgetary income, is one of the least diversified economies in the Middle East. 

Iraq was also one of the OPEC members who called for an emergency meeting of the cartel to discuss ways to support oil prices, which crumbled in March to as low as $25 a barrel Brent. 

Iraq may see its wish granted soon after U.S. President Donald Trump intervened in the oil price war between Saudi Arabia and Russia and discussed the oil market with Saudi Crown Prince Mohammed bin Salman and with Russian President Vladimir Putin. 

“The Kingdom calls for an urgent meeting for OPEC+ states and another group of countries, with aim of reaching a fair solution to restore a desire balance of the oil markets,” Saudi Arabia said on Thursday, via its official Saudi Press Agency, while President Trump said that he expects and hopes the Saudis and Russia to cut back “approximately 10 Million Barrels, and maybe substantially more.”  

By Tsvetana Paraskova for Oilprice.com

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