Iraq Cuts June Crude Supplies

Iraq will supply crude to at least two Asian buyers at around 10 percent below contract volumes for June, possibly the first major cut in allocations by the OPEC producer this year, industry sources said on Wednesday.

The cut was on medium-heavy Basrah Light crude, they said.

It was not immediately known why Iraq cut the supply, but it might be related to production problems at its oilfield, the sources said.

Oil output and exports from Iraq fell last month due to repeated attacks against the Kirkuk-Ceyhan export oil pipeline and possible pumping problems in Basra fields.

A Reuters survey showed oil output in Iraq — the only member of the 12-member OPEC producer group that does not have an agreed production limit — fell to 2.28 million barrels per day (bpd) in April from 2.32 million bpd in March.

Iraq’s oil exports fell slightly in April to 1.767 million bpd from 1.79 million bpd the month before, an Iraqi Oil Ministry official has said.

Iraq exported an average of 1.42 million bpd from the southern oil hub of Basra and 341,965 bpd from the northern oilfields around Kirkuk, including about 9,983 bpd by trucks to Jordan.

The fall in exports was due to bad weather in Basra and a brief halt of exports via the Kirkuk-Ceyhan pipeline after a bomb attack last month.

Term buyers of Iraqi crude have not been eager to take Basrah Light in the first quarter of this year due to increased supplies of other medium-heavy grades, such as from Saudi Arabia, Qatari al Shaheen crude and the new Russian ESPO Blend, traders have said.

Reflecting the weak demend, Iraq’s State Oil Marketing Organisation (SOMO) made a rare offer of 3 million barrels of Basrah Light on the spot market for loading in March.

Demand for Basrah Light improved slightly last month, with some cargoes heard to have traded at premiums to the official selling price (OSP), trader said.

Iraq raised the OSP of its Basrah Light crude loading in June to customers in Asia by 10 cents to a discount of $1.05 to the average of Oman/Dubai quotes.

Top oil exporter Saudi Arabia earlier this week said it would supply full volumes to at least seven Asian clients in June, steady from May, as oil held within the kingdom’s preferred range and Asia was expected to lead demand growth. (Additional reporting by Florence Tan, James Topham in TOKYO, Ahmed Rasheed in BAGHDAD and Alex Lawler in LONDON; Editing by Ramthan Hussain)

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