Iraq's crude exports hit 2017 high before OPEC cuts extension

Oil tankers shipped the most crude from Iraq in six months in May, when OPECís second-biggest producer was negotiating with the groupís other members to persist with supply constraints to shore up the global market, Bloomberg reported on Friday.

Tankers loaded 122 million barrels of Iraqi crude at ports in the Persian Gulf and Mediterranean Sea last month, according to vessel-tracking and shipping agent data. The daily outflow of 3.93 million barrels was just shy of the record, set in November, and exceeded that of October, the baseline month for cuts by the Organization of Petroleum Exporting Countries.

Ambitious goals to keep expanding its output capacity, coupled with an economy thatís still reeling from decades of bloody conflict, mean Iraq is among the most closely monitored nations for compliance to OPECís curbs. Along with Russia and other non-member oil suppliers, the exporter club is seeking to shrink a crude glut thatís holding prices at about $50 a barrel, less than half where they were three years ago.

ďIraq is the big one in terms of growing production and not having too much inclination to cut,Ē said Robin Mills, head of Dubai-based consultancy Qamar Energy. ďOut of the OPEC members, itís the one to watch.Ē

The countryís state oil marketing company, known as SOMO, sells crude via the southern port of Basra in the Persian Gulf as well as through a pipeline to Turkey. The semi-autonomous Kurdistan Regional Government independently ships oil that it produces at fields in the north of the country via Turkish ports. The flows captured by tanker tracking are for both.

Sales from federally operated fields excluding those from the KRG averaged 3.262 million barrels a day, the Oil Ministry in Baghdad said on Thursday. Tanker tracking shows those flows for that oil at 3.31 million barrels a day.

Exports from neighboring Iran also surged in May, reaching 2.2 million barrels a day, compared with 1.82 million in April, according to ship-tracking data. Shipments from Libya, unbounded by OPEC restrictions, are at a 2 1/2 year high.

OPECís production limits took effect in January, initially for a period of six months, with OPEC and partners agreeing May 25 to another nine months of reductions. While it could be because of extra output, Iraqís gain in May can also be explained in part by catching up on reduced flows in April, when a damaged jetty was under repair.

Iraq agreed in the OPEC deal to cut output by 210,000 barrels a day from its October level. While exports are not a perfect match for output, the market watches them closely to get an idea of production. Iraq doesnít have the same capacity to store crude as some other producer nations, meaning that whatís pumped out of the ground is piped relatively quickly onto ships.