Iraq's oil exports have fallen by eight percent or 300,000 barrels per day (bpd) so far in June, according to shipping data and industry sources, suggesting OPEC's second-largest producer is getting closer to meeting its pledge in an OPEC-led supply cut deal.
Southern Iraqi exports in the first 14 days of June averaged 2.93 million bpd, according to Refinitiv Eikon data and separate tracking by two industry sources. That is down 170,000 bpd from May's official southern exports figure. "To my surprise, Basra exports are indeed down so far this month," one of the industry sources said, referring to shipments from the main southern Iraq terminal of Basra.
In addition to actual export cuts in June, Iraq has also made large reductions in planned supplies to Asia in July, separate sources with knowledge of the matter said on Tuesday, suggesting Iraqi exports will fall more. The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, began a record supply-cutting deal in May to bolster oil prices hammered by the coronavirus crisis. Iraq is cutting output by 1.06 million bpd under the deal.
Oil Exports in Iraq Fall
The June figures suggest while Iraq is making progress, it has yet to completely fulfil its pledge. OPEC+ will be scrutinizing compliance this week, after countries including Iraq pumped more than their targets in May. In May, Iraq delivered 38 percent of its pledged output cut, according to a Reuters survey, much lower than top exporter Saudi Arabia. If exports in June hold steady, adherence would rise to at least 60 percent, based on Reuters calculations.
The south is the main outlet for Iraq's crude, so a good part of its OPEC+ cut should show up in lower exports. Iraq says it is in the country's interest to comply with the deal and its oil minister, Ihsan Abdul Jabbar Ismail, said Iraq will export an average of 2.8 million bpd in June, implying supply will drop from current rates. The country was reluctant to join previous OPEC-led supply cut efforts which began in 2017 and was at times OPEC's least compliant member with the deal.
Still, exports from northern Iraq are also coming down in June. So far, total northern exports stand at about 350,000 bpd, down about 130,000 bpd from May, tanker data shows. This level would be in line with Iraq's request to Kurdish authorities to export a maximum of 370,000 bpd in June. The International Energy Agency, which advises industrialized countries on oil policy, said in a report issued on Tuesday it had also seen a decline of about 300,000 bpd in Iraq shipments.
"Preliminary tanker tracking data for June show crude exports already trending lower by at least 300,000 bpd and wellhead flows are likely to follow a similar path," the IEA said. Larger cuts may be made in the rest of June, boosting compliance further, following a request to oil companies in southern Iraq to lower production.