Iraq plans to double Kirkuk oil output

The Iraqi government is understood to be planning to double production from the Kirkuk oil fields following its seizure of the city from Kurdish authorities. According to media reports, the government has asked BP to increase output to more than a 1mn b/d. Kirkuk, which lies in the disputed region between Kurdistan and the rest of Iraq, is estimated to hold some 9bn barrels of recoverable oil. Iraq is the second biggest producer in OPEC after Saudi Arabia.

The Kurdish authorities had earlier halted 350,000 b/d of production from the Bai Hassan and Avana fields, leading to a spike in the oil prices to $58.17/b. However, production was resumed after the government retook control of the North Oil Company.

Meanwhile, concerns regarding the re-imposition of US sanctions on Iran have added to uncertainty in the Middle East market. President Trump is reported to have refused to certify that Iran is complying with the nuclear accord. The US Congress now has 60 days to decide whether to reimpose sanctions which could have a negative effect on Iran’s oil export industry.

Commenting on these developments, Mustafa Ansari, Energy Economist at APICORP (Arab Petroleum Investment Corporation), says: ‘What we are beginning to see is that as markets begin to tighten, prices will begin to react more to supply disruptions. However oil prices are determined by factors other than just supply. General growth in demand for crude will undoubtedly continue to place upward pressure on prices, especially with OPEC’s production cap still in place. Nevertheless, Iraq has already demonstrated its ability to maintain and even grow crude production in the face of political and security risks, and their ability to bring back production immediately after taking back control of the North Oil Company is testament to their commitment. As for Iran, the re-imposition of US sanctions will have little bearing on the validity of the Joint Comprehensive Plan of Action (JCPOA), thus Iran will be able to maintain exports.’