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ECONOMY
Pump jacks operate at dusk near Loco Hills in Eddy County, New Mexico, April 23, 2020. File photo: Paul Ratje / AFP
ERBIL, Kurdistan Region – Iraq’s oil revenues fell by almost half in April compared to March in a second consecutive month of losses, according to oil ministry figures published Friday.
The numbers do not bode well for Iraq, which depends on oil revenues for roughly 90 percent of its annual budget.
Oil revenues for the month of April were $1.423 billion, with an average export of 3.427 million barrels per day (bpd).
This marks a significant fall on March figures, which saw revenues of $2.98 billion, with an average export of 3.390 million bpd.
The fall compounds earlier losses on February’s figures, when revenues stood at $5.52 billion, with an average export of 3.391 million bpd.
A barrel of Iraqi oil sold for an average of $13.801 in April compared to March’s average of $28.436 and February’s average of $51.374.
The month on month fall reflects the global oil price collapse which was sparked by a standoff between oil producing rivals Saudi Arabia and Russia and a worldwide decline in demand for fuel under the coronavirus lockdown.
For years, the oil giants coordinated their production benchmarks through a deal known as OPEC+. When global demand began to shrink as a result of the outbreak, Saudi Arabia proposed cutting production to stabilize the price.
Russian oil companies, struggling to find buyers under US sanctions, refused to cut production. Saudi Arabia responded by flooding the market with cheap oil to strong-arm the Russians.
For smaller oil producing nations like Iraq, the standoff has proved disastrous. Already locked in a political crisis and battling an outbreak of coronavirus, Iraq will be forced to borrow or spend its foreign reserves to keep its head above water.
Moscow and Riyadh reached a deal on April 12 to cut oil production by 9.7 million bpd – equivalent to 10 percent of the world’s daily supply – for May and June. Global demand will remain low, however, as a result of the pandemic and the economic downturn it has sparked.
OPEC producers and allies agreed to continue the reduction until April next year. Iraq has also pledged to adhere to the agreement.
On Friday, Iraqi authorities announced they have begun cutting oil production, according to state media.
“Iraq started in the first hours of the first day of May to reduce production in Basra oil fields by a rate of 23 percent to reduce the total Iraqi oil production,” officials said, according to INA.
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