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Iraqi oil shipments face competition from Russian crude... and an expert comments
Shafaq News/ Iraq, which currently exports the majority of crude oil to Asia, may face competition in that market from Russian grades that are sold at a discount to other crudes amid tightening sanctions imposed on Moscow.
Trade sources told Standard & Poor's Global that Iraq's Basra crude is likely to face stiff competition in the current trading cycle as alternative grades from Russia and the West are increasingly attracting price-sensitive buyers in Asia.
According to shipping data from Kpler, last year Iraq was the second largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), India's largest oil supplier, and the latter the second largest importer of crude in Asia.
Iraq supplied India with more than 1 million barrels per day in 2021, more than a third of its total exports last year, according to Kepler.
Data showed that Iraq supplied China with 953,000 barrels per day in 2021, which is the second largest customer for oil last year, while Europe received 15% of Iraq's exports of crude oil in 2021.
However, Iraq has exported more crude to Europe in recent months, with May volumes rising to 635,000 bpd from 591,000 bpd in April and 500,000 bpd in March, according to Kepler data.
Russia's seaborne crude exports remained at their post-pandemic highs in the first half of June, as India and China continued to snap up reduced volumes and EU member states pulled back from oil trade with Moscow ahead of the bloc's first-quarter 2023 deadline to end imports of Russian crude.
Kpler's data showed that the two Asian oil importers had grown their share of Russia's shipped crude to nearly 30% and 20%, respectively, a combined growth of more than 1 million barrels per day over pre-war levels.
Russia's main export grade Urals crude has been trading at deep discounts to other grades since the country invaded Ukraine on February 24.
The Russian Urals are classified as medium acid, with a specific gravity of about 31-32 API with a sulfur content of 1.7%, and this makes them very similar in quality to other medium acid ores such as Basra Medium, Saudi Arabia Medium, and Arabia Heavy, Iranian Heavy, Brazilian Miro and Omani Crude Blend.
For his part, the oil expert, Amir Muhammad Al-Hasani, commented in an interview with Shafaq News Agency, on the possibility of Russian crude competing with Iraqi crude in Asian markets, saying that "Russian crude cannot compete with Iraqi crude markets," attributing the reason to the fact that the latter "deals with solid companies and has Forward contracts with Indian and Chinese state companies to buy oil.
And Al-Hassani said, "The demand for Russian oil comes from independent Indian companies, not government, due to the low prices sold to Asia after the embargo on Russian oil by the European Union."
He added, "Despite the entry of Russian oil to the Asian markets, Iraqi oil still ranks first for India's imports for the past months, and it ranks third for China's oil imports," adding that "the drop in Russian Urals crude prices raises the appetite of commercial oil companies in Asia."
He pointed out that "Iraq can play a greater role in exporting oil to Europe to compensate for Russian oil, and this is what we heard about from the desire of some countries, such as Britain, France and Germany, to obtain Iraqi oil during the coming period," stressing that "these exports will not be at the expense of its exports." oil destined for Asia.
The Iraqi Oil Minister, Ihsan Abdul-Jabbar, had confirmed Iraq's endeavor to increase its oil production to 8 million barrels per day at the end of 2027.
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Trade sources told Standard & Poor's Global that Iraq's Basra crude is likely to face stiff competition in the current trading cycle as alternative grades from Russia and the West are increasingly attracting price-sensitive buyers in Asia.
According to shipping data from Kpler, last year Iraq was the second largest oil producer in the Organization of the Petroleum Exporting Countries (OPEC), India's largest oil supplier, and the latter the second largest importer of crude in Asia.
Iraq supplied India with more than 1 million barrels per day in 2021, more than a third of its total exports last year, according to Kepler.
Data showed that Iraq supplied China with 953,000 barrels per day in 2021, which is the second largest customer for oil last year, while Europe received 15% of Iraq's exports of crude oil in 2021.
However, Iraq has exported more crude to Europe in recent months, with May volumes rising to 635,000 bpd from 591,000 bpd in April and 500,000 bpd in March, according to Kepler data.
Russia's seaborne crude exports remained at their post-pandemic highs in the first half of June, as India and China continued to snap up reduced volumes and EU member states pulled back from oil trade with Moscow ahead of the bloc's first-quarter 2023 deadline to end imports of Russian crude.
Kpler's data showed that the two Asian oil importers had grown their share of Russia's shipped crude to nearly 30% and 20%, respectively, a combined growth of more than 1 million barrels per day over pre-war levels.
Russia's main export grade Urals crude has been trading at deep discounts to other grades since the country invaded Ukraine on February 24.
The Russian Urals are classified as medium acid, with a specific gravity of about 31-32 API with a sulfur content of 1.7%, and this makes them very similar in quality to other medium acid ores such as Basra Medium, Saudi Arabia Medium, and Arabia Heavy, Iranian Heavy, Brazilian Miro and Omani Crude Blend.
For his part, the oil expert, Amir Muhammad Al-Hasani, commented in an interview with Shafaq News Agency, on the possibility of Russian crude competing with Iraqi crude in Asian markets, saying that "Russian crude cannot compete with Iraqi crude markets," attributing the reason to the fact that the latter "deals with solid companies and has Forward contracts with Indian and Chinese state companies to buy oil.
And Al-Hassani said, "The demand for Russian oil comes from independent Indian companies, not government, due to the low prices sold to Asia after the embargo on Russian oil by the European Union."
He added, "Despite the entry of Russian oil to the Asian markets, Iraqi oil still ranks first for India's imports for the past months, and it ranks third for China's oil imports," adding that "the drop in Russian Urals crude prices raises the appetite of commercial oil companies in Asia."
He pointed out that "Iraq can play a greater role in exporting oil to Europe to compensate for Russian oil, and this is what we heard about from the desire of some countries, such as Britain, France and Germany, to obtain Iraqi oil during the coming period," stressing that "these exports will not be at the expense of its exports." oil destined for Asia.
The Iraqi Oil Minister, Ihsan Abdul-Jabbar, had confirmed Iraq's endeavor to increase its oil production to 8 million barrels per day at the end of 2027.
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