Iraq’s crude oil production
The EIA estimates that Iraq’s crude oil production fell by 35,000 bpd (barrels per day) to 4,320,000 bpd in November 2017 compared to the previous month. The production fell 0.8% month-over-month and 300,000 bpd, or 6.5% year-over-year. Production fell due to supply outages in Kirkuk and ongoing production cuts.
Iraq’s crude oil production declined 340,000 bpd or 7.3% from its peak in December 2016, which is bullish for oil prices. Higher oil (UCO) prices favor energy producers (IYE) (XOP) like W&T Offshore (WTI), Chevron (CVX), Northern Oil and Gas (NOG), and Sanchez Energy (SN).
Iraq and the production cut deal
Iraq supported the extension of output cuts until December 2018. Iraq had 110% compliance with the ongoing production cuts in November 2017. Iraq pledged to cut 210,000 bpd of crude oil as part of the production cut deal.
Iraq’s crude oil production plans
Iraq plans to ramp up production after the expiry of the production cut deal. It is also planning to invest in new oil exploration and production projects, which would increase supplies. Any rise in production from Iraq could pressure oil (USL) prices.
However, on December 25, 2017, the Iraqi oil minister said that the oil market would balance by 1Q18 and thus support oil (SCO) prices.
Next, we’ll look at how Libya’s oil supply outage impacts crude oil prices.