Baghdad August 30 2022: Violent clashes in Baghdad have yet to hit Iraq’s oil production, soothing initial trader concerns that a major source of supply could be disrupted.
There’s been no effect on output or exports in OPEC’s second-largest producing country from the clashes, which left at least 15 dead, Alaa Al-Yassiri, director general of the state-run oil marketing company known as SOMO said in an interview. Iraq has the capacity to boost exports to various destinations and won’t refuse requests from buyers for more supply, he said.
With a separate outbreak of violence in Libya underscoring the fragility of the north African country’s output, a meaningful loss of Iraqi barrels could hit the global market hard. Oil prices in London surged about 4% on Monday after protesters stormed Baghdad’s international and government zone and fighters clashed with government forces. They gave up most of those gains on Tuesday, suggesting initial concerns over supply have faded.
The Organization of Petroleum Exporting Countries and partners including Russia meet on Sept. 5 to discuss output and the outlook for supply and demand. An uncertain market facing economic headwinds and excess volatility could force the broader group known as OPEC+ to lower output, the oil minister of Saudi Arabia, the collective’s de-facto leader, said earlier this month.
While Iraq and other partners publicly backed that call, Baghdad is looking to raise exports and find new customers. SOMO is set to export 3.35 million barrels a day of crude from its main port in the south this month, Al-Yassiri said by phone.
That would be an increase from the 3.2 million barrels of daily shipments from Basra in the south that were observed by Bloomberg tanker tracking in July. Sales from the north could reach up to 90,000 barrels a day, Al-Yassiri said, compared with 76,000 barrels daily, according to tanker tracking data for July.
“Demonstrations and acts of violence in Iraq did not affect the operations of Iraqi oil exports through the southern ports,” Al-Yassiri said.
Europe is struggling for access to more energy as a boycott of seaborne Russian supply planned for December threatens to exacerbate an already tight supply outlook. Al-Yassiri said that Iraq would boost oil exports to Europe if asked and is considering raising Europe’s share of Iraqi exports to 40%, from 20% currently.
A delegation from SOMO plans to travel to Germany for export talks as Iraq seeks new customers in Europe. Asia is the largest market for Middle Eastern suppliers like Iraq and SOMO has received requests to send more supplies to Asia, chiefly from India and China.
Iraq is also keen to meet requests to fill additional demand for oil in Asia as it competes with discounted barrels from Russia for customers in the region.
