Iraq’s crude oil exports are set to increase following a deal that the government in Baghdad struck at the end of last week with the United States. The deal will see Iraqi oil transported via the corridor along the coast of Oman, Reuters has reported.
The information comes from Iraq’s Foreign Minister, who spoke with Al Jazeera, also saying the country has so far lost some $60 billion from the war-related disruption to exports of crude oil. Iraq is OPEC’s second-largest oil exporter after Saudi Arabia but, unlike Saudi Arabia, it is almost entirely dependent on the Strait of Hormuz for getting its crude to global markets.
As a result, Iraq has been among the most severely affected Gulf states after the U.S. and Israel launched their first strikes on Iran at the end of February. The war led to massive production losses in Iraq during the first few months, with output from the southern fields dropping precipitously by 70% to1.3 million barrels daily as wells had to be shut in due to limited storage tank availability and the impossibility of exporting the oil via the blocked Hormuz.
Since then, production has recovered. In October, Iraq exported an estimated 3.4 million barrels daily, which was almost on par with pre-war export levels of 3.3 to 3.5 million barrels daily. The October average was also a solid increase from September, when Iraq exported oil at a daily rate of 2.65 million barrels. According to the country’s oil minister, Bassem Mohammed Khudair, Iraq is now exporting through three routes: the Strait of Hormuz, Ceyhan, and tanker trucks through Syria.
Meanwhile, Iraq has ambitions to boost its output and exports, with exports seen at 5 million barrels daily. To this end, the government is investing in new pipelines as well as new export terminals on Iraq’s Gulf coast.
By Charles Kennedy for Oilprice.com
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