Iraq Plans For $42/B In 2017, Exports At 3.75mn b/d

Iraq is to base its 2017 draft budget on an oil price of $42/B and exports of 3.75mn b/d. Both figures look broadly realistic, albeit with some key caveats.

The Iraqi government’s statement on the 2017 draft budget, released 27 September, adopts a $42/B oil price assumption that errs on the side of caution, albeit substantially less so than an earlier draft that envisaged $35/B. This was changed on the recommendation of the IMF which considered the initial price too low and which is finalizing arrangements for a $5.34bn loan to the government (MEES, 23 September).

For August exports of Iraqi crude averaged $39/B, $8 below Brent. With front month Brent futures currently trading at $48-49/B, and 2017 contracts around $3-4/B above this, Iraq’s 2017 oil price assumption is around $1-3/B below that implied by current futures prices. (CONTINUED - 932 WORDS)