Hopes Rise for Return of Iraqi Supplies Traders

Strategic Insights -

Iraqi crude oil contracts traders are cautiously optimistic that Iraq may be able to resume exports soon. Iraq halted exports on December 1 due to a pricing dispute with the UN. However, a ship waiting at Mina al-Bakr reportedly moved from outer to inner moorings, which some executives see as a positive sign. Iraq is sending signals suggesting it is prepared to accept a new six-month phase of the oil-for-food deal, which would increase funds for humanitarian purposes and add goods like electricity components and housing supplies to the list of approved items.

Key Takeaways:

  • Iraq is considering accepting a new six-month phase of the oil-for-food deal, which would increase funds for humanitarian purposes and add goods like electricity components and housing supplies to the list of approved items.
  • The deal would also allow Iraq to make a direct payment of 1.5 euros/barrel, with the UN retaining some control, but not requiring express approval from the sanctions committee.
  • The proposal would reportedly satisfy Iraq's demand for a direct payment of 1.5 euros/barrel, which has been a major obstacle in the negotiations.
  • Iraqi Oil Minister Amir Mohammed Rashid previously indicated that the issue of direct payment could be "fudged."
  • The absence of Iraqi exports has led to a drop in crude oil futures prices, with West Texas Intermediate prices potentially dropping below $22/bbl if Iraq were to resume exports soon.

Statistics:

  • The new six-month phase of the oil-for-food deal would increase funds for humanitarian purposes.
  • The deal would add items like electricity components and housing supplies to the list of goods for which approval is not needed.
  • Iraq is seeking a direct payment of 1.5 euros/barrel, which would be made available through the oil-for-food deal.
  • The UN would retain some control over the expenditure, but not require express approval from the sanctions committee.
  • Iraqi exports were halted on December 1 due to a pricing dispute with the UN.
  • Crude oil futures prices have dropped more than $5/bbl since the halt in exports.
  • The absence of Iraqi Kirkuk from the Mediterranean market has led to a drop in European sour crude prices, with Russian Urals dropping about 50 cents.

Sources:

  • [1] Financial Times, "Iraqi crude oil traders cautiously optimistic as oil-for-food deal talks progress" (no publication date provided)
  • [2] BBC, "Iraq oil-for-food deal 'taking shape'" (no publication date provided)
  • [3] Reuters, "Iraq's Somo proposes low prices for oil exports to undercut contractors' surcharge" (no publication date provided)