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- WEDNESDAY, 06-12-2024, PM 7:14
- KARAR AL-ASSADI
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Iraq relies heavily on oil revenues, as oil constitutes 89 percent of government revenues, which has made the country hostage to external or internal borrowing to cover the budget deficit from the effects of the global oil price crises.
After the Council of Ministers approved the largest budget in Iraq for the year 2024, which amounted to 221 trillion dinars, with a financial deficit exceeding 63 trillion, a survey conducted by S&P Global Commodity Insights on June 10 showed that Iraq increased its production by 40 thousand barrels per day during the month of May, after a decision OPEC reduces cuts.
On April 1, the Ministry of Oil decided to voluntarily reduce production by 211 thousand barrels per day, starting next May until the end of 2024, in coordination with some oil-producing countries, with the aim of taking precautionary measures to confront the challenges facing the global oil market, and to achieve a balance between... Supply, demand and market stability.
The nine OPEC members subject to quotas boosted crude oil production by 100,000 barrels per day last May, led by Nigeria and Iraq, pushing the group 320,000 barrels per day above their collective targets, while the bloc's allies, led by Russia, reduced production.
Iraq increased its production by 40,000 barrels per day to reach 4.28 million barrels per day, which is 280,000 barrels per day more than its current target, despite its agreement last May to compensate for the surplus production. The Platts survey estimates the current oil production in the Kurdistan region. Iraq, at 210 thousand barrels per day.
Iraq's production reached 4.28 million barrels per day, up from the previous month, which reached 4.24 million barrels per day.
Iraq's revenues for the month of March amounted to seven billion and 404 million dollars, amounting to 100 million and 913 thousand and 27 barrels, with an export rate of three million and 255 thousand barrels, with an average price of 73.37 dollars.
About a year ago, European countries and the United States of America entered into a conflict with Russia, against the backdrop of the latter’s invasion of its neighbor Ukraine and its attempt to occupy it completely. Since the outbreak of that war, which ended with the withdrawal of Russian forces, an economic blockade was imposed on Moscow, which included preventing it from exporting and removing it from the regime. Global financial transfer, while Russia stopped the gas supply line to Europe, which plunged the old continent into a major energy crisis.
A researcher in financial and economic affairs, Nasser Al-Kanani, confirmed in a previous report that “Iraq depends entirely on the sale of oil for its budget revenues, and any decrease in oil prices will have a significant impact on saving funds in the budget, whether operational or investment, and that is why he went for this.” The move is to raise oil prices, to provide sufficient funds to cover the budget deficit.”
Al-Kinani explains, “Iraq calculated the price of oil in the budget at $70, and any price above that will contribute to filling the budget deficit, and could also provide surplus funds that can be used in the budget for the coming years.”
The 2024 budget, according to what Prime Minister Muhammad Shiaa Al-Sudani announced, amounts to 211 trillion dinars, and employee salaries for the year 2024 amount to 62 trillion dinars, while the 2023 budget amounted to 199 trillion dinars and employee salaries amounted to 59 trillion dinars.
According to Al-Sudani, the revenues of the 2024 budget are estimated at 144 trillion and 336 billion dinars, while expenditures amount to 210 trillion and 936 billion dinars, while the deficit is 63 trillion and 599 billion dinars.
Al-Sudani said that the governorates’ allocations to local government programs with an investment allocation amounted to 10.633 trillion dinars in 2023, and we financed 3.333 trillion dinars, based on fundamental requests from the governorates, and the remainder of the allocation was 7.333 trillion dinars in a trust account, at the disposal of the provincial governments.
It is noteworthy that Prime Minister Muhammad Al-Sudani stated, shortly after taking office, that Iraq would hold discussions with other OPEC members to reconsider and increase its production share, justifying this by the need “for funds to rebuild Iraq,” while stating that Iraq is keen on stabilizing oil prices. Energy, and he does not want prices to rise above $100 or fall in a way that affects the level of supply and demand.
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