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Page added on May 26, 2015
Iraq About to Flood Oil Market
Iraq is taking OPEC’s strategy to defend its share of the global oil market to a new level.
The nation plans to boost crude exports by about 26 percent to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout. The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting on June 5.
While shipping schedules aren’t a promise of future production, they are indicative of what may come. The following chart graphs planned tanker loadings (in red) against exports.
As in previous months, Iraq might not hit its June target – export capacity is currently capped at 3.1 million barrels a day, Deputy Oil Minister Fayyad al-Nimaa said on May 18. Still, any extra Iraqi supplies inevitably mean OPEC strays even further above its collective output target of 30 million barrels a day, Morgan Stanley says. The following chart shows OPEC increasing output in recent months against its current target.
Defying the threat from Islamic State militants, Iraq has been ramping up exports from both the Shiite south – where companies like BP Plc and Royal Dutch Shell Plc operate – and the Kurdish region in the north, which last year reached a temporary compromise with the federal government on its right to sell crude independently.
10 Comments on "Iraq About to Flood Oil Market"
Plantagenet on Tue, 26th May 2015 7:47 pm
The risk of Iraq and/or Iran dumping oil onto the market is one reason why I haven’t bought any oilco stocks——yet.
If Iran and Iraq ramp up their oil production, then the oil glut will get much worse. We may see oil plunge to $30 or $20 bbl, and the bottom will drop out of the US and EU energy stock market sector.
Speculawyer on Tue, 26th May 2015 8:55 pm
Iraq is in the midst of a civil war and Bloomberg expects them to flood the market with oil? Get real.
Perhaps they’ll up production in the south of the country a bit but ‘flood the market’ is something I can’t see happening.
Newfie on Wed, 27th May 2015 3:15 am
Fantastic! I’m buying a new Hummer this week. LOL.
paulo1 on Wed, 27th May 2015 8:38 am
Iraq will be lucky to survive another 1-2 years as a state. If flooding the ‘market’ means siphoning off production on the black market by armed workers with face coverings and auto-matic weapons, have at it.
Saudia Arabia next?
BobInget on Wed, 27th May 2015 9:10 am
swiped from IV message board.
Msg 183021 of 183055 at 5/26/2015 11:32:12 PM by
OniMaster
What are the “fundamentals”?
I’ve heard this same line parroted several times now, that “oil prices rallying were defying the fundamentals.” Everyone seems to be so clear on this and it terrifies me because I have no doubt right now that there is not some worldwide oil glut….. am I really out to lunch on this one?
What exactly are these “fundamentals” other than countries own proclamations about their production?
There is no physical evidence of a supply glut, we simply have the numbers being provided from countries on their supply. I don’t think we have numbers on their demand, or they aren’t published as well.
Here is how I understand the oil price plunge back in December. Almost all of the glut came to the US because that is where the majority of the storage is (and it was the “source” of the glut).
Everyone was trying to one-up (or under!) each other with low-ball oil prices, down to $25 / bbl. But it never happened even though there was an actual supply glut that was physically evident. One of the big items I saw that started to support a bottom was traders taking oil off the markets for a contango play.
This contango play effectively “smoothed” out production, in expectation of an eventual production drop. But right now, there isn’t much of a contango play at all, and from some recent articles, I believe the tankers are actually unloading their contango plays in some cases.
So, if we believe there is a 4 mill glut, where is it? We know the producers are being paid, if they weren’t, they’d leave the oil in the ground (sure, Saudi Arabia may be fighting for market share, but pumping more than they can sell? unlikely!) At a 4 mill glut, that would be builds around 28 mill a week (I know, simple math) but if it isn’t going into American storage, where is it going? And what idiot is watching his tanks fill to the brim and still paying $65 brent per barrel knowing that a 1.5 mill glut took prices down to $45 / bbl and the futures market showing no incentive for storage?
And finally if some 28 Mbbls of oil are going into non american storage, how come the WTI-Brent spread hasn’t tightened at all over the last two months?
What’s more likely?
That some countries are fudging their domestic production numbers? Or a bunch of pretty successful business people across the globe suddenly lost their brains and have no idea how to make money anymore?
Are there some magical “fundamentals” that I am missing?
BobInget on Wed, 27th May 2015 9:32 am
I agree with Speculawyer .
First of all Iraq’s war is an ‘Oil’, not civil war.
Iraq (and Syria) are at the center of the fighting.
At this minute Iraq’s army is engaging ISIL in a battle that could decide Iraq’s future.
(the problem, if Iraqi forces do regain lost ground,
ISIL will pop up unexpectedly somewhere else)
Oil fields are about to be center attraction.
No (loving) oil patch wife is going to permit her old man to work in Iraq when pay in Argentina, for instance, is almost as high. Maybe you missed the beheading videos ?
BobInget on Wed, 27th May 2015 9:49 am
Paulo,
Saudi Arabia is not next, Damascus is next,
then comes the all out battle for Iraqi oil.
If the Iraqi Army collapses, Iran’s militias will duke it out inside Iraq till one side gives up.
Baghdad is quickly running out of fuel. Iraq’s biggest refinery, once rebuilding begins, will be off line for years. Iraq will need to import diesel. These days a person can’t run even a dirty war without diesel.
ISIL may never completely control Iraq or Syria, for that matter. All they really need are those oil fields. Once, thus fortified, IS goes after KSA.
No actual invasion needed. Saudi Arabia will collapse from within.
America, Asia, will eventually buy oil from IS (or worse) because they have to.
Davy on Wed, 27th May 2015 10:33 am
First of all the war in Iraq and Syria is a religious war and oil war second.
Isis will never control but a percentage of Iraq and Syria roughly corresponding to where they have popular support among the Sunni.
There is way too much hype with ISIS. The ME is a complex region of shifting sands never to be controlled by any one group.
Cassie on Wed, 27th May 2015 10:47 am
Part of the game plan; the US intention is to create a new – for the times – a new patsy state, and ISIS or ISIL is it.
Not so different from Iran, KSA, or Israel, all created as part of global empire gaming.
Business as usual.
BobInget on Wed, 27th May 2015 2:00 pm
This is slightly off topic but I’m determined to keep KSA aggression in front. IMO it is the biggest game changing thing this year in oil markets.
By Mohammed Ghobari
Saudi-led air strikes hit Yemen’s capital Sanaa: residents Reuters
Moroccan F-16 jet from Saudi-led coalition in Yemen crashes Reuters
Moroccan F-16 jet from Saudi-led coalition in Yemen crashes Reuters
Saudi-led air strikes hit Yemen after truce expires Reuters
Saudi-led coalition launches wave of air strikes on Yemen Reuters
CAIRO (Reuters) – Saudi-led air strikes killed at least 80 people near Yemen’s border with Saudi Arabia and in the capital Sanaa on Wednesday, residents said, the deadliest day of bombing in over two months of war in Yemen.
Iranian-backed Houthi rebels seized Sanaa last September and then thrust into central and south Yemen. Seeing the Houthi advance as a bridgehead for Iranian influence in the region, a Saudi-led coalition began air strikes on March 26 in a campaign to restore Yemeni President Abd-Rabbu Mansour Hadi to power.
Wednesday’s air raids on the Bakeel al-Meer area in Hajjah province across Saudi Arabia’s border with Yemen killed at least 40 people, most of them civilians, local inhabitants said.
Tribesmen aligned with the Houthis have been fighting Saudi ground forces in the area, and border clashes have escalated the conflict between the Shi’ite Muslim rebels and the coalition of Sunni Muslim Gulf Arab states.
“Houthi gunmen were attacking Saudi border positions from this area but the coalition’s planes failed to hit the fighters and bombed civilians (instead),” one resident told Reuters by telephone.
View galleryPeople look at a burning fuel truck after it was set …
People look at a burning fuel truck after it was set ablaze during clashes between Houthis and fight …
Several hours later, air strikes on a special forces base allied with the Houthis in central Sanaa, the Houthi-run state news agency Saba said, in an account confirmed by residents.
“Around 40 people were martyred and more than 100 others were wounded, according to a preliminary toll, in bombing by the Saudi aggression’s planes on the Sabaaeen area in the capital Sanaa today,” the Saba dispatch said.
A Yemeni soldier who survived the attack said the raid hit a warehouse where soldiers and Houthi militiamen were receiving their weapons. “So far we’re not sure how many are dead,” the soldier told Reuters.
“There were many people at the entrance to the warehouse, getting their weapons, farmers, cooks (and also soldiers); these poor people were standing at the entrance to the warehouse. Two strikes, two hits, (occurred) one right after the other. The warehouses are completely destroyed.”
Yemeni army units loyal to former president Ali Abdullah Saleh, forced from power by a popular uprising in 2011, are fighting alongside the Houthis.
View galleryBoy looks on as he plays at a school used as a shelter …
A boy looks on as he plays at a school used as a shelter for people displaced by Saudi-led air strik …
PORT BOMBED, TALKS DELAYED
Arab warplanes and ships also hammered Yemen’s largest military port in the Red Sea city of Hodeida at dawn on Wednesday, a local official said, the most serious attack on the country’s navy in over two months of war.
Hodeida and its military bases are aligned with the Houthis, the most powerful force in Yemen’s complex conflict, which also involves southern secessionist militia, local tribal forces and Islamist militants such as al Qaeda’s regional wing.
“The naval base was bombed by aircraft and ships. Large parts of it were destroyed and two warships were hit, and one of them, named the Bilqis, was destroyed and sank onto its side, and five gunboats shelled the administrative buildings of the base,” the official told Reuters by telephone from Hodeida.
Houthi forces shelled the southern city of Aden, a bastion of resistance against their moves into Yemen’s south, and local fighters built on gains against the Houthis in recent days by seizing their last military post in the nearby city of Dalea.
Sunni Arab states see the Houthis as a proxy for projecting the power of arch-rival Iran in the Arabian Peninsula.
Yemen’s exiled government in Saudi Arabia has said the Houthis must recognize its authority and vacate Yemen’s main cities before any peace talks can begin.
The United Nations said on Tuesday U.N.-backed negotiations which were set for May 28 in Geneva had been postponed.
(Additional reporting by Mohammed Mukhashaf in Aden; Writing by Noah Browning; Editing by Sami Aboudi and Mark Heinrich)
IMO:
KSA can’t unring this bell.
As word filters onto the Arab Street of these ongoing atrocities, there will be pay-back.
Saudi Arabian Royals are not about to stick around and defend the nation.