Iraq not keeping oil buyers up to date regarding export cuts

Baghdad/London — Iraq has yet to inform its regular oil buyers of cuts to its exports, suggesting it is struggling to fully implement an oil cartel Opec deal with Russia and other producers (Opec+) on a record supply cut, traders and industry sources said.

Less than full compliance by Iraq, as well as by smaller producers such as Nigeria and Angola, could hurt Opec+ efforts to cut output by 9.7-million barrels per day (bpd) from May 1, equivalent to about 10% of world demand before the coronavirus crisis led to a slide in consumption and prices.

Iraq, Opec’s second largest oil producer, has instructed its biggest company, Basra Oil Company (BOC), to cut output from May as part of its efforts to reduce its output by 1-million bpd, or 1% of global supply, an oil ministry source said.

But it has yet to agree an action plan with other oil companies such as BP, ExxonMobil, Eni or Lukoil, which operate the biggest fields in the country, a BOC spokesperson said.

“Talks with international oil companies are still continuing to find ways of curtailing production that serve all parties and ensure mutual interests are observed,” the BOC spokesperson said. “We can’t say talks hit a deadlock. We expect a breakthrough to be reached soon.”

Iraq’s oil ministry could not be immediately reached for comment. BP, Exxon, Eni and Lukoil declined to comment.

One industry source active in Iraq said the companies are refusing the cut and that delays in forming a new government in Iraq are complicating the discussions. “It’s a mess at the moment,” the source said.

Opec Gulf states, including Saudi Arabia, Kuwait and the United Arab Emirates (UAE), have informed their customers of cuts to exports. Kuwait, Oman and the UAE have also officially informed Opec.

Three trading sources said Iraq has not issued any such statements to its regular oil buyers yet. Two of the sources said Iraq’s May export plans from the south were broadly in line with April’s at about 3.3-million bpd.

There is no requirement for participating countries to tell Opec how they will make their cut, but informing customers about their oil allocations is standard practice.

Opec’s secretary-general Mohammad Barkindo declined to discuss individual country compliance: “We are now focused on the full and timely implementation of this historic agreement.”