Iraq Oil Surge Seen Losing Steam Just as Markets Need More
- Lower crude prices hamper government’s investment in fields
- Growth in Iraq oil output to decline in 2017: Energy Aspects
Oil Rises to Six-Month High
Iraq’s oil industry is on a roll. Production has jumped more than 40 percent since mid-2014 and exports are at near-record levels.
It probably won’t last. Plunging government revenue is hampering the state’s ability to invest, while OPEC’s second-biggest crude producer is reaching the limits of its capacity to store and export oil, according to analysts at Energy Aspects Ltd. and FGE. Spending on the country’s biggest fields may shrink to as little as $7 billion this year from about $13 billion in 2015 and $20 billion in 2014, Richard Mallinson of Energy Aspects said Monday.
Iraq has boosted output after decades of sanctions, war and under-investment, with international companies such as BP Plc and Lukoil PJSC developing some of the largest deposits in its oil-rich southern region. The country is exporting 3.3 million barrels a day of crude this month from the southern port of Basrah, and it targets keeping shipments at that level for the rest of the year, Deputy Oil Minister Fayyad Al-Nima said in a May 13 interview. Without more investment, these exports are sure to slide, the analysts said.