Iraq is committed to all OPEC+ production cut agreements that help contain the volatility in oil prices because OPEC’s second largest oil producer seeks higher prices for its crude exports, the country’s oil minister said Dec. 6.
Ihsan Ismaael said in an oil ministry statement that oil prices are expected to rise in the first quarter 2021 but cautioned about their current trajectory.
Iraq has failed to stick to its oil production quota for most of this year, but has vowed to implement compensation cuts to make up for overproduction.
Iraq’s federal November crude exports, excluding those from the semiautonomous Kurdistan region, fell 6% month on month to 2.709 million b/d, likely improving compliance with its OPEC+ quota, according to provisional data released by the country’s oil ministry Dec. 1. The ministry did not publish production figures.
Iraq has a production quota of 3.804 million b/d and had agreed to implement “compensation cuts” of 203,000 b/d below that in September and 165,000 b/d for October to December for its excess production from May to August.
Iraq plans to start exporting next year a new type of crude, Basrah Medium, in addition to the current grades of Basrah Light and Basrah Heavy, the minister said. In early November, the State Oil Marketing Organization notified customers that it was introducing this new grade to split Basrah Light into two crudes to support the stability of its oil export streams.
Iraq has also received interest from buyers for its proposal for a crude supply contract that include a partial prepayment for the oil supplied, the minister said. SOMO has received replies from more than one buyer, he added. SOMO is proposing selling 4 million barrels a month over a five-year period, with prepayment for the first year of supply.
Iraq plans to base its 2021 oil budget on a price of $42/b, the minister said. The country’s parliament is expected to start debating this month the budget draft bill. Iraq did not have a budget for 2020 due to a change in government.