Iraq sells its oil at auction to boost its sales of crude as its production grows faster

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4/29/2017 12:01:00 AM

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Iraq, OPEC's second-largest oil producer, is experimenting with an alternative way to sell its oil in the hope of getting more money for crude oil by showing its oil at auction.

Iraqi observers said Iraq would try to sell a crude oil tanker in Basra through a public auction in the Dubai commercial market, a sign of a fever of competition with rival producers following three-year oil prices.

The sale of the two million barrels of oil is a far cry from the traditional way in which the Middle East's largest producers have long relied on the sale of oil to traders, and the breadth of competition to find new ways to get the best prices from customers.

Saudi Arabia, OPEC's largest producer, is said to be considering selling its oil at auction through the Dubai Mercantile Exchange (DME) - where the bourse has proved itself as a major trading venue for Middle East oil deals. Saudi Aramco, the oil company Governmental organizations in the Kingdom, to comment on their plans.

Ahmed Sharaf, chairman of Bursa Dubai, said that Iraq's use of electronic auctions followed the sale of two cargoes by the Sultanate of Oman since it was launched in 2015, saying that there is a need for reliable, organized and innovative tools to sell crude oil in such a competitive market. .

Traders will be able to bid for the shipment of cargo on an electronic platform, but they will have to pay a portion of the official sale price of the Iraqi state oil company Sumo for the month of June. They will have to agree to ship only to Asia, an area where oil demand is growing and Iraq hopes to gain more customers. Iraq is taking further steps to improve its options for selling crude oil after the establishment of a joint venture between Sumo and Letasu, Russian.

"All major producers are looking for new ways to sell their oil," said Olivier Jacob, an analyst at Switzerland-based Petromatrix. "In recent years, consultants and industry analysts have encouraged national oil companies to establish joint ventures and partnerships with Commercial companies in order to learn how to be smarter and responsive to market needs.

It has become more important in a market where supply is increasing. Traditional oil exporters have to become more stringent in order to secure crude oil sales as competition grows.

Saudi Aramco has established a commercial sector for its oil products without any outside assistance, but has so far taken only small steps to liberalize its crude oil sales, which account for more than one in every 10 barrels of oil in the world.

Last year, Saudi Aramco sold a number of spot shipments to independent refineries in China and Poland, seeking to boost its response to Russian attempts to boost sales at its expense. In 2006, Oman Oil Co (OOC) cooperated with Vitol, the world's largest independent trader, International trade. After working together for almost a decade, it became fully owned by the Government of Oman in 2015.

Iraq has boosted its sales as production grew rapidly over the past few years due to investments made in the aftermath of the 2003 US invasion.

The country's average production in March was about 4.5 million barrels per day, according to the director of Sumo Falah al-Ameri. Exports amounted to about 3.8 million barrels per day.

The Iraqi Oil Minister Jabbar Ali Hussein al-Allaibi announced on 19-2-2017 the increase in the volume of oil reserves to Iraq to (153) billion barrels, while confirming on 20-3-2017 the country's quest to reach the reserve oil to 170 billion barrels during the two years The price of crude oil has fallen sharply for nearly two years, down from $ 120 a barrel in mid-2014 to $ 50 at the moment, prompting oil producers around the world to take steps to boost non-oil revenues. Announced in November last year that its members had reached an agreement on reducing production To the Organization by 1.2 million barrels, beginning on 1 January 2017 for six months, and has already entered into force.