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Experts: Iraq faces an opportunity to diversify oil export trends
Economical 09/25/2023
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Baghdad: the mainstay of the emirate
Experts in energy and economic affairs have suggested that Iraq will occupy a large space in global oil markets, especially European ones, as a result of the decline in Russian supplies to the “Old Continent,” highlighting the geopolitical and economic importance of oil alike, as oil exerts a major strategic influence and role in political and economic security. Social and military issues for exporting and importing countries, stressing the possibility that black gold prices will continue to rise during the coming periods as a result of declining supplies and the onset of winter.
In support of the expectations expressed by many specialists to “Al-Sabah” regarding the continued rise in oil prices in the coming periods, JPMorgan International Bank believes that the currently high oil prices have the potential to increase further in the coming period, and that Brent crude may rise to $150 per barrel. .
In the midst of this, member of the Parliamentary Oil, Gas and Natural Resources Committee, Zainab Al-Moussawi, explained that directing foreign direct investment towards the oil sector leads, as a result, to increasing financial resources and enhancing the state’s public revenues, which reflects positively on the economic development process.
Al-Moussawi said in a press statement received by “Al-Sabah”: “The Sudanese’s recent visit to New York included important and very positive meetings with the heads of several countries, including major countries in the field of oil and gas, which resulted in their invitation to invest in the oil sector, as they expressed a high desire, which indicates "There is remarkable progress recorded by the Iraqi government."
Al-Mousawi added, “The research hypothesis stems from foreign investment directed toward important economic sectors, as this leads to the development of those sectors, and that directing foreign direct investment toward the oil sector leads, as a result, to increasing financial resources and enhancing the state’s public revenues, which reflects positively on the process of economic development and restoration.” Reconstruction in Iraq.
The financial advisor to the Prime Minister, Mazhar Muhammad Salih, confirmed to the Iraqi News Agency (INA) that the acceptable rate of oil price referred to by Prime Minister Muhammad Shia’ al-Sudani, between 85 and 95 dollars, would reduce the financial deficit and achieve sufficient balance and guarantees for spending on development and reconstruction projects. Pointing out that it is Iraq's vision to bring balance and stability to the global economy.
Saleh explained that “the average price of a barrel of oil, which is about 15 to 20 dollars higher than what is in the general budget, will reduce the planned fiscal deficit.”
In turn, researcher and academic Dr. Abdul Karim Al-Issawi told “Al-Sabah”: Iraqi oil has a large and important role in the global market. Oil is no longer the material that is marketed like other materials or only a financial and economic resource, but rather oil has begun to exercise a major strategic influence and role in Political, economic, social, and military security for exporting and importing countries, whether in times of peace or war, pointing out at the same time that most of Iraq’s oil exports are heading to three markets: Asian, European, and American, at a rate of 64 percent, 27 percent, and 6 percent, respectively, for the year 2021.
Al-Issawi explained, “Iraq prefers to export its oil to Asian countries in order to maximize its revenues because insurance and transportation costs are borne by the buyer, and thus these costs do not appear in the pricing equation for oil exported to Asia. On the one hand, Iraq bears part of the insurance and transportation costs when it exports to Asia.” European markets reach about $3, and $3.3 per barrel for the American market due to the long distance, in addition to the traffic fees imposed on oil tankers that pass through water canals.”
Al-Issawi pointed out that “the Russian-Ukrainian war and the American-European economic sanctions imposed on Moscow changed the map of global trade in general and energy in particular, especially Russian trade, which subsequently redirected many shipments towards Asia via the Mediterranean and the Suez Canal.”
Al-Issawi also pointed out that “China and India are the main traditional partners for Iraqi oil exports, but according to what was reported by one of the international companies, Russian oil exports transported by sea to India and China have grown very significantly since the beginning of 2022, and have risen to record levels within one year of 704 thousand barrels per day to about 1,258 thousand barrels, and therefore Iraqi oil exports to India and China have witnessed real competition with Russian oil exports, especially after Russia made offers and discounts to buyers of its crude oil exports,” pointing out that “these speculations were confirmed by Iraqi oil exports.” To India, which recorded its lowest level in 20 months during October 2022, a decrease of 6.9 percent compared to the previous year.
For his part, economic researcher Mustafa Al-Jayashi says: It is possible for Iraq to exploit the situation to its advantage. Iraqi crude oil may be an alternative to Russian crude oil in Europe if appropriate conditions are available.
Al-Jayashi stated that the countries of the Old Continent are facing a cold winter, in addition to being suffering from a large deficit in their energy balance. In 2021, the total production of crude oil in Europe reached about 527.13 million barrels per day, meaning that it imported more than 10 million barrels. daily to meet its needs, and it relies on Russian crude oil to meet 28 percent of this need.
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