Iraq Set to Flood Oil Market to Further Undercut US Shale
Iraq is taking OPEC's strategy to defend its share of the global oil market to a new level.
The nation plans to boost crude exports by about 26% to a record 3.75 million barrels a day next month, according to shipping programs, signaling an escalation of OPEC strategy to undercut U.S. shale drillers in the current market rout.
The additional Iraqi oil is equal to about 800,000 barrels a day, or more than comes from OPEC member Qatar. The rest of the Organization of Petroleum Exporting Countries is expected to rubber stamp its policy to maintain output levels at a meeting June 5.
While shipping schedules aren't a promise of future production, they are indicative of what may come.
As in previous months, Iraq might not hit its June target — export capacity is capped at 3.1 million barrels a day, Deputy Oil Minister Fayyad al-Nimaa said May 18. Still, any extra Iraqi supplies inevitably mean OPEC strays further above its collective output target of 30 million barrels a day, Morgan Stanley said.
Defying the threat from Islamic State militants, Iraq has been ramping up exports from both the Shiite region in the South — where companies such as BP and Royal Dutch Shell operate — and the Kurdish region in the North, which last year reached a temporary compromise with the federal government on its right to sell crude independently.
