While the global oil market is suffering from tumbling prices and looming oil supplies from Iran, Iraq is expanding its own oil production steadily. According to the official statistics, Iraq is exporting crude on a massive scale in January. Bagdad expresses no concern about Iran’s return to the market, Iraqi Oil Minister Adel Abdul Mahdi told Reuters in an interview.
The top official confirmed Baghdad’s strategy of keeping the oil taps wide open with a view to stepping up oil output in 2016. The minister said there is a possibility of increasing output from the country’s southern region by up to 400,000 barrels per day this year to over 4 million bpd in total. Meanwhile, Iraq has been exporting more than 3.3 million bpd on average since early January. “In fact, we in Iraq are not short of contracts. Until now, the demand for our oil is more than our offer, even with the return of Iran,” Adel Abdul Mahdi said. “Iraqi oil will remain cheap for China. Our 2016 term contracts are fully booked,” he added. The minister stated that the average cost of extraction in southern Iraq is about $10 per barrel.
In the context of such a low production cost, the Middle Eastern country can easily compete with other global oil exporters attracting buyers with good bargains. Lifting oil prices now would require both the Organization of the Petroleum Exporting Countries and non-OPEC nations to agree on curbing output. Iraq would support an emergency OPEC meeting if the cartel can reach an accord in coordination with non-OPEC producers. The proposal of OPEC’s second largest exporter has to be duly appreciated.
