Iraq: Record Exports, But Contract Reform Hangs In The Balance

2017 was a year of consolidation for Baghdad; federal exports averaged 3.31mn b/d, and revenues rose $15.7bn. But longer term, the oil ministry must address perennial contract issues to steer the industry in the right direction.

Iraq exited 2017 on a high note with record federal crude exports of 3.535mn b/d in December. This edged out December 2016’s previous record of 3.519mn b/d. With average crude export prices averaging a more than three-year high of $59.29/B, revenues of $6.496bn were the most since September 2014.

Full-year revenues of $59.3bn were the highest since 2014’s $84.1bn, and marked the first annual rise since that year.

Despite its Opec commitments, Baghdad will seek to boost exports further in 2018 while capitalizing on higher oil prices. If Iraqi crude export prices remain around December levels, Iraq can expect about $6bn per month in oil revenues (see chart). Even if average prices for Iraq’s exports of medium-to-heavy sour crude – which currently sells at a $6 discount to Brent – fell to $54/B, revenues would remain at $5.47bn per month—over $500mn per month higher than the 2017 average. This therefore implies full-year revenues of around $65.6bn-71.8bn.


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