Five large Iraqi oil cargoes are heading to Europe this and next month in a rare development that is the opening shot in a pricing war with rival Russia and could help to bring down high oil prices, according to a Reuters report.
The exports of Iraqi Basra oil, a new phenomenon for the European Market, were triggered by a US oil stocks release in June and a strengthening of Russian crude values, traders and analysts said, adding they would have longer-term implications.
As Iraq is building export facilities and ramping up production, it could often compete with rival OPEC members and Russia, the world’s top oil producer, for market share.
Iraqi production has been gradually climbing in the past months to reach 2.7 million barrels per day versus 2.5 million last year as multi-billion joint projects with international majors begin to pay. Further increases are contingent on improvements to security, infrastructure and foreign investment.
If Iraq’s oil industry can rise to the challenge the Oil Ministry has set, the country will rival Saudi Arabia and Russia in production capacity by 2017. However, the industry – and latterly the Oil Ministry itself – has expressed doubts about whetehr a target of around a half that amount is not more realistic.
Saudi Arabia already has capacity of some 12 million bpd and its production is close to 10 million bpd, while Russia is producing at record rates above 10 million bpd.
Even the pared-back Iraqi additions will be a huge increase and could reach 6-8 million bpd within the next 5 years, compared with global demand of roughly 90 million bpd. Iraqi exports flow from two ports — Kirkuk crude flows mostly to Europe from the Turkish port of Ceyhan while Basra, shipped from the port of the same name in the Middle East Gulf, is exported more often to Asia and North America.
