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Iraq’s oil production may be impacted by a recent agreement to pay for Iranian gas imports through a barter deal involving fuel oil and crude oil from Baghdad, according to a state oil marketing company SOMO source.
Iraqi Prime Minister Muhammad al-Sudani announced the deal to solve difficulties in paying Iran under US sanctions.
Although the implementation of the oil and gas barter deal will take time, Iraq is likely to try to increase production from its southern fields to compensate for the suspension of oil exports through the Turkish port of Ceyhan, as reported by Standard & Poor’s Global, citing a source at SOMO.
The details of the barter deal, including the quantities of crude oil and fuel oil to be exported to Iran and the specific crude grades to be sold, have not yet been received by SOMO.
In addition to the challenges posed by the suspension of oil exports from the north, Iraq has been facing widespread power outages in the Federal District due to reduced Iranian gas supplies. These outages have impacted oil production, including operations at the Zubair fields operated by Eni and the Rumaila fields operated by BP.
Once Iran’s gas supplies are fully restored, the power outages are expected to cease, allowing production in the southern fields to return to normal levels.
Iraq produced 3.985 million barrels per day (bpd) of oil in June, slightly higher than the 3.955 million bpd in May. These production levels are below Iraq’s OPEC+ quotas, set at 4.22 million bpd.
Furthermore, there are concerns that the barter deal with Iran could violate US sanctions against Tehran. Three former US officials have indicated that such a deal would require a waiver from the United States to comply with the sanctions.
The developments surrounding Iraq’s oil production and the implementation of the barter deal will continue to be closely monitored, as they have implications for Iraq’s energy sector and its ability to meet export targets.
