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Established in 2006 as a Community of Reality

Welcome to the Neno's Place!

Neno's Place Established in 2006 as a Community of Reality


Neno

I can be reached by phone or text 8am-7pm cst 972-768-9772 or, once joining the board I can be reached by a (PM) Private Message.

Established in 2006 as a Community of Reality

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    Iraq's oil faces an "existential threat"... and SOMO rejects options to avoid major losses

    Rocky
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    Iraq's oil faces an "existential threat"... and SOMO rejects options to avoid major losses Empty Iraq's oil faces an "existential threat"... and SOMO rejects options to avoid major losses

    Post by Rocky Sat 19 Mar 2022, 5:52 am

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    Iraq's oil faces an "existential threat"... and SOMO rejects options to avoid major losses
    March 19, 2022

    Ultra Iraq - Editorial Team
    Despite the high demand for crude oil globally, and its prices rising to insane levels, Iraqi oil may live an existential threat, represented by the loss of its most important market, which consumes 75% of Iraq's oil exports.
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    Iraq will face a problem of losing part of its marketing share to China and India
    Iraqi oil is at the forefront of the list of suppliers of crude oil to India, as well as the third largest exporter to China after Saudi Arabia and Russia. While Iraq exports daily about 3.3 million barrels per day, 1.3 million barrels go to India, and more than one million barrels go to China That is, about 2.5 million barrels per day of Iraq's oil exports go to China and India, which constitutes about 75% of Iraq's oil exports.
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    With the start of the Russian war on Ukraine, and the countries of the Western world represented by the United States and Europe taking a package of sanctions and a ban on importing Russian oil, international companies have already begun to avoid buying Russian oil, which prompted Russia to offer competitive offers that  [You must be registered and logged in to see this link.] both China and India.
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    While Russia exports 7 million barrels per day, which is double Iraq's exports, questions arise whether Iraqi oil lives an existential threat to Russia's acquisition of Iraq's share in the Indian and Chinese markets due to price discounts that exceed $20 per barrel.
    Two options for Iraq
    Iraq will have only two options to maintain its exports in the face of these new data. The first is for Iraq to “exchange markets” with Russia, that is, to acquire Russia’s share in the American and European markets, as Russia [You must be registered and logged in to see this link.] to Europe and America nearly 2.6 million barrels. Daily, however, experts rule out the possibility of Iraq's ability to export such large quantities to Europe due to its dependence on the sea port to export oil to the south and east. As for the port of Ceyhan and then to Europe, Iraq's export capacity is only 75,000 barrels per day.
    As for the other option, Iraq would reduce the prices of its crude to Asia in a competitive formula with Russian oil and offer significant discounts that would enable it to maintain its export share in the Indian and Chinese markets.
    Even with discounts, Iraq will not succeed
    The oil expert, Nabil Al-Marsoumi, considers that the discounts offered by Russia are a major challenge to Iraqi oil, because the Russian Urals crude is characterized by its high sulfur and is compatible with Indian refineries.
    In his interview with Ultra Iraq, Al-Marsoumi believes that "Iraq will face a problem by losing part of its marketing share in China and India," while Al-Marsoumi suggested that "Iraq will keep pace with Russia by giving discounts on Basra's medium and heavy crude."
    However, Al-Massoumi added, "Even in light of the discounts, I do not think that Iraq will be able to match this competition, because Russia has given another concession to pay in Indian rupees and Chinese yuan in exchange for Russian oil."
    Al-Marsoumi stresses that these data give a clear perception that “it is not permissible for a country to export all its oil through a single outlet, which is the southern ports, and it should not depend on two countries in marketing its oil, hence the importance of diversifying export outlets such as the Turkish Ceyhan Line and Pipeline.” Basra - Jordan, which faces illogical and unscientific opposition, as the pipeline will provide other markets for Iraq's oil in Egypt, Europe and Africa.
    Sumo: We are not thinking of replacing the markets... nor selling less than the price
    Despite the two options that experts talk about the need to follow to avoid losing the two main markets, the Iraqi Oil Marketing Company "SOMO" excludes resorting to either of the two options.
    In response to a question posed by "Ultra Iraq" to Sumo in this regard, the company sent its answer through its spokesman, Haider Al-Kaabi, stressing that "Asian demand in general, and Indian and Chinese demand in particular for Iraqi crude oil were not affected by the Russian-Ukrainian crisis."
    In its letter to Ultra Iraq, the company added, "All our customers in these two markets have requested loading their full contractual quantities without any shortage."
    The company clarified that "the Asian market is the main and target market for Iraq for its oil exports due to the good growth it achieves in the field of refinery expansion and consumption," considering that "it is not economically and strategically feasible to reduce our market share in it in return for directing larger quantities to the European and American markets, which seek to reduce their fuel consumption." fossil".
    In addition, SOMO refuses to reduce prices in the Russian way and sell at less than market prices by a large margin, as SOMO indicates that it “observes the variables of the global oil markets and uses its accounts to translate these changes, whether negatively or positively, to ensure the production of a price difference for signal oil, which reflects Accurately the fair value of Iraqi crude oil,” stressing that “it is not our policy to sell below that value or at price discounts for it.”
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    The Asian market is the primary and target market for Iraq for its oil exports
    In its letter to Ultra Iraq, the company states that "the oil marketing company's high experience in the oil market and global marketing mechanisms enabled it to overcome all previous crises and the current crisis by achieving its main objective of selling all available quantities for export with the highest possible financial returns."
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