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EconomyHoy.mx / Reuters
– 11:30 – 6/11/2018
– Updated: 12:08 – 06/11/18
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Iraq will put all its equipment into action to pump crude oil imminently
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Texas is also reacting to the decline; loses 2.25%, to 61.7 dollars
Oil drilling. Photo: Reuters.
The price of a barrel of Brent, a benchmark for Europe, fell to at least 21 August after recording Tuesday a decline of over 2% and amounting to around 71.6 dollars. Iraq's plans to pump a lot more oil are weighing on the price of oil that day, as well as Trump's exemptions in sanctions against Iran.
Oil quotes ambitious plans from Baghdad (OPEC's second largest producer) that aims to increase crude oil production to its maximum short-term pumping capacity (about 5 million barrels per day).
In addition, Thamer Ghadhban, the new Iraqi Oil Minister, has obtained an exclusive mandate Reuters which aims to double the production of crude oil in the country as soon as possible. If this promise is fulfilled, the supply could have more leeway to respond to a sudden increase in demand.
Thus, it is the first time in almost three months that the price of oil is less than 72 dollars, after which it will reach at the beginning of October a maximum of more than 86 dollars per barrel, the highest figure since 2014.
The West Texas Intermediate barrel price, a benchmark for the United States, also reacted downward, down 2.25% to 61.7 dollars a barrel. This is the lowest price since March 2018.
This Tuesday is the second day of the new US sanctions on Iranian oil exports. The US State Secretary at the US State Department, Mike Pompeo, confirmed this week that the United States had exempted China, India, Taiwan, South Korea, Japan, Turkey, Italy and Greece to respect this embargo. These exemptions will allow Iranian crude to remain in international markets for some time, which will strengthen supply.
The "dream" of Iraq
The Iraqi Minister of Petroleum assured Reuters, in its first interview since taking office, that the increase in oil production is the "priority" of the Middle East country, which has also pushed the market down.
In particular, Iraq plans to increase its production capacity to five million barrels per day in 2019, up from 4.5 million currently. In addition, the Iraqi Executive has committed to reach a production capacity of 8.5 million barrels in the coming years.
Iraq must invest in new productions to achieve this ambitious goal, which would leave Baghdad only 2 million barrels a day with the all-powerful Saudi Arabia (which currently produces 10.4 million barrels a day).
Ghadhban said that they had already spoken to international companies willing to make the necessary investments to carry out Iraq's plans. For the daily production of 8.5 million barrels to be possible, it is necessary to increase pumping in the southern fields of the country and to build new pipelines that distribute these millions of barrels. Among the companies mentioned by the Iraqi minister, there is the British BP.
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