Just a week after it agreed to OPECs output-cut deal, Iraq is showing signs of going rogue, and instead of cutting crude exportsa logical byproduct of lowered productionit plans to increase oil sales in January.According to an oil-loading schedule dated December 8 and viewed by The Wall Street Journal, Iraqs state-owned oil marketing company SOMO plans to increase shipment of its Basra export grades to 3.53 million barrels per day in January, which would be a 7-percent increase from October volumesan increase that is no small matter, as Basra grades sales account for around 85 percent of Iraqi crude exports.While production and exports do not necessarily rise and fall at the same time due to storage and domestic consumption, Iraqs consumption is only 15 percent of its oil output and relatively stable. In addition, the countrys total maximum storage capacity is just over 10 million barrels, a capacity insufficient to fully account for higher Basra exports.According to the documents the WSJ has seen, Iraqs planned sales to Indian and Chinese refiners in January would be 390,000 bpd higher than its December deliveries.In contrast with Iraq, some other Middle Eastern producers are already adjusting their January exports to comply with the cuts. Abu Dhabi National Oil Company (ADNOC), for example, has said that it would reduce crude oil supplies next month in line with OPECs decision.In OPECs November 30 deal, Iraq committed to cut production by 210,000 bpd effective January, from a reference production level of 4.561 million bpd. Iraq was one of the last holdouts of the OPEC deal in the months leading to the decision to curtail production: first disputing the sources that OPEC uses to estimate members output, then demanding exemption on the grounds that it needs oil revenues to fight Islamic State.Since the first comments on a possible OPEC deal emerged, analysts and investors have been wondering whether the cartels producers would honestly be willing to stick to their pledges instead of cheating, as they tend to do. In Iraqs case, this is all the more true, considering that if oil prices do not rise substantially and significantly, the country wont be able to offset lost production with higher revenues, if it sticks to its commitment to cut.Over the weekend, Iraqs Oil Minister Jabar al-Luaibi told Reuters in an interview that the country was committed to cut output to comply with the OPEC-non-OPEC deal to reduce oversupply and lift oil prices.According to OPECs monthly report out today, Iraqs output in November was 4.564 million bpd, according to secondary sources. Iraqs self-reported figures to the cartel show production had hit 4.8 million bpd.SEE ALSO:Here's how the Fed's interest rate hike could affect your loans and credit card debtJoin the conversation about this storyNOW WATCH: Watch the trailer for the new Martin Scorsese film that took over 20 years to make
Click here to read full news..
