Prices recover as Iraq resumes exports

David Knott
Senior Editor

Crude oil prices have recovered from the recent dip caused by United Nations flashing a green light to renewed world oil exports from Iraq.

The renewal occurred under U.N. Resolution 986, which calls for sale of $2 billion worth of oil to pay for food and medical supplies.

Now winter weather conditions and quota violations by Organization of Petroleum Exporting Countries (OPEC) members are viewed as the key driver of oil prices over the next few months.

Brent blend dated crude oil was trading at about $24.60/bbl as news of the U.N./Iraq agreement broke and plunged $2/bbl in the following days as traders reassessed their positions.

But in trading in London Dec. 16 Brent dated crude leapt $1.20/bbl to close at $24.10/bbl, while Brent crude for January delivery maintained the $23.76/bbl level it reached at the end of the previous week.

In trading on Dec. 17, Brent dated increased only 2¢/bbl, while Brent January crude stayed at $23.76/bbl. This bore out analysts' predictions that the crude price would recover (OGJ, Dec. 16, p. 21).

First cargoes

Middle East Economic Survey reported that Turkish Petroleum Refineries Corp. (Tupras) planned to load its first cargo of Iraqi oil at Ceyhan terminal Dec. 16, using the 150,000 dwt Gole tanker.

Tupras is also expected to take delivery of some of its contracted oil via a 450 km pipeline from Ceyhan to its Kirikkale refinery.

Meanwhile, Coastal Corp. is expected to become the second company to take Iraqi crude.

MEES said Coastal will load a tanker at offshore Mina al-Bakr terminal in the northern Persian Gulf for delivery to its Aruba refinery.

MEES reported that U.S. buyers will be sold Basrah light crude oil for $3.60/bbl less than West Texas Intermediate (WTI) blend, and Kirkuk crude for the WTI price minus $2.85/bbl.

Similarly, European buyers will receive Kirkuk crude for $1.55/bbl less than the price of dated Brent crude, while Asian buyers will be charged 20¢/bbl more than the average Oman/Dubai crude price for Basrah light crude.

OPEC overproduction

MEES also reported that OPEC output averaged more than 26 million b/d in November, as Venezuela and Nigeria continued to produce oil at full tilt, and erratic Iranian oil production bounced back by more than 300,000 b/d.

OPEC's November total average output of 26.04 million b/d exceeded by more than 1 million b/d the group's ceiling and was up 400,000 b/d from the average output for October.