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Iraqi Oil Exports From The Gulf Near Record

Source: Reuters 6/23/2014, Location: Middle East

Iraq's oil exports from its southern terminals are near record rates in June despite attacks by Sunni Islamist insurgents and their capture of swathes of territory in northwest and central Iraq, according to loading data and industry sources.

The insurgency and evacuation of some staff by oil majors Exxon Mobil and BP despite moves by the Baghdad government to tighten security have raised concern that Iraq's crude exports could slow down.

The worries have boosted oil prices, sending Brent crude

to a nine-month high above $115 a barrel. Brent crude was up at around $115 a barrel on Monday, supported by worries about potential disruptions to supply from Iraq.

Iraqi officials say the southern regions that produce some 90 percent of the country's oil are completely safe from the Islamic State of Iraq and the Levant (ISIL), which has seized much of the north in a week as Baghdad's forces there collapsed.

Exports from Basra and Iraq's other southern terminals have averaged 2.53 million barrels per day (bpd), according to shipping data for the first 21 days of June tracked by Reuters. Two industry sources, who also monitor the exports, had a similar estimate.

"I do not think this turmoil will have any impact on Basra," a trader with a company that buys Iraqi crude said on Monday. "It is too far south."

The export rate so far in June is close to May's average of 2.58 million bpd - the highest since 2003. However, it is not as high as the 2.70 million bpd Iraqi officials have said is planned for June.

"So far, exports are looking very steady compared with last month. There does not seem to have been any spillover in the south," said an industry source who tracks tanker shipments.

Iraq's oil potential was held back by decades of wars and sanctions. The country has been expanding oil production in the south since Western companies signed a series of service contracts with Baghdad in 2010.

Total exports from Iraq's northern and southern ports hit a record high of 2.8 million bpd in February. But northern shipments of Kirkuk crude have been shut since March 2 due to attacks on a pipeline to Turkey, keeping total exports below their potential.

While there is no sign yet of a drop in southern exports, traders were concerned that fallout from the insurgency may impact further increases in Iraqi production.

"The turmoil may slow things down - not exports, but production may not increase," said the trader whose company buys Iraqi crude.

Although the pipeline from Kirkuk has been shut since March, the autonomous Kurdistan region has been exporting some of its own oil output by truck and via a new pipeline to Turkey, in defiance of the central government.

Kurdistan's Ministry of Natural Resources said on Friday it delivered a second oil shipment through the port of Ceyhan to the buyers, and two more tankers were loading.

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