An expected increase of $6 billion due to the rise in oil prices
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Baghdad: Shukran Al-Fatlawi
Economic affairs specialists have renewed their emphasis on the necessity of exploiting the rise in global oil prices and working to establish non-oil production projects, stressing the importance of increasing the price of black gold in reducing the planned deficit gap in the budget and increasing the country’s financial returns, as well as the possibility of doubling investment and service projects in the country. The country.
Oil prices stabilized until noon yesterday, Wednesday, at around $90 per barrel, which exceeds the planned price in the budget of $70 per barrel, which will lead to a doubling of Iraq’s monthly revenues from the sale of oil, while an economic expert expected that the increase achieved for Iraq would be due to... Global oil prices rose by about six billion dollars.
The Parliamentary Oil and Gas Committee suggested that oil prices would continue to rise globally, attributing the reason to a decline in supplies of “black gold” as a result of the positions of Saudi Arabia and Russia, which decided to reduce their oil production, expecting at the same time that the country’s financial deficit would decrease by 50 percent.
Economist, Dr. Nabil Al-Marsoumi, explained to Al-Sabah that the tendency of oil prices to rise about two months ago made them much higher than the price of oil presented in the Iraqi budget, estimated at about $70 per barrel.
Al-Marsoumi added that, according to the budget law, Iraq is expected to achieve planning oil revenues during the year 2023 amounting to $90 billion, assuming a price of $70 per barrel, and an export quantity of 3 and a half million barrels.
Al-Marsoumi expected the rise to continue in the coming periods, pointing out that Iraq can sell at a price of no less than $85 per barrel, and even with a reduction of about 100,000 barrels, it is possible to achieve total oil revenues of no less than $96 billion, meaning achieving more revenues than oil revenues. It is estimated at $90 billion, an increase of $6 billion, indicating the possibility that this increase will reduce the budget deficit for the current year 2023.
Imad Al-Mohammadawi, who is interested in economic affairs, explained to Al-Sabah that the country went through difficult periods as a result of its total dependence on the sale of oil, especially during the periods when prices decreased significantly, which led it to borrow internally and externally and bear the burden of loans to address the budget deficit.
Al-Mohammadawi expected that the rise in oil prices would exceed the $100 per barrel barrier in the coming periods, which could reduce and benefit from the large difference in various economic matters.
The financial advisor to the Prime Minister, Mazhar Muhammad Saleh, had confirmed that “the oil markets indicate a tangible rise in the prices of the cycle of oil assets, as Brent crude oil has exceeded the barrier of $90 per barrel, which has a positive impact on reducing the hypothetical deficit gap in the federal general budget (which is... The budget approved pursuant to Law No. 13 of 2013, estimated at approximately 64 trillion dinars as an average deficit in the fiscal years 2023, 2024, and 2025, was adopted as a preventive financial buffer to confront fluctuations in oil prices and demand surprises in energy markets.
He added, "What matters is that the average prices of exported oil during the fiscal year exceed the default price approved by the budget for a barrel of Iraqi exported oil, amounting to 70 US dollars. Therefore, any sales exceeding the above-mentioned default price will undoubtedly lead to reducing the gap in the hypothetical deficit and in a clear inverse relationship." .
He continued: “We believe that the budget for the next two years will maintain its constants and its preventive and precautionary measures regarding the development of prices in the oil markets and its relationship to the hypothetical deficit, especially for the fiscal year 2024, as the northern hemisphere is facing a high demand to build stocks facing the winter, and the indicators of war in Ukraine indicates its continuation, and that the OPEC Plus group is also continuing the policy of limiting the quantities produced to maintain the prices of exported oil in proportion to the stability of its countries’ budget revenues.
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