After a steady rally on the crude markets, oil dipped slightly after news of an increase in production coming out of the Organisation of Petroleum Exporting Countries (OPEC).
Output from the global oil cartel increased by 484,000 barrels a day (bpd) in April to 32.64 million bpd, caused mainly by expanded yields in OPEC’s second largest oil producer, The Republic of Iraq.
According to the country’s oil ministry, Iraq exported a record high of 3.4 million bpd in April, some 100,000 barrels more than the previous month, excluding the average of 330,000 bpd exported by the Kurdistan Regional Government to Turkey via the Kirkuk–Ceyhan pipeline. This also comes at a time of constitutional crisis for an Iraqi government that declared a state of emergency on April 30th after anti-corruption protesters in Baghdad breached the Green Zone and stormed parliament.
At the end of 2014, the Iraqi government was targeting a 9 million bpd production peak by 2020. In mid-2015, after a deepening of the chaos ravaging the Fertile Crescent, this was revised down to 6 million barrels. Whether this will be feasible given the political instability of a nation where an average of 36 civilians have died every day this year from violence is unlikely.
Some 700 kilometres and eight hours driving time from Baghdad, things are looking much rosier for Iraq’s old nemesis, the Islamic Republic of Iran. After the curtain was lifted on Persian trade earlier this year, foreign investors have flooded into a market that has been depressed and cratering for decades. The Western Asian nation has been quick to seal deals to exploit its vast hydrocarbons wealth and a high-capacity industry sector that was verging on dormancy and decay.
The 2,775 kilometre-long Iran-Pakistan Gas pipeline project is set to provide much-needed crude to the sixth most populous country in the world by 2017. On May 2nd, Iran’s oil minister, Bijan Zangeneh, met with South Korean dignitaries to sign a memorandum of understanding for increased cooperation in the energy field. Iran is currently the world’s third largest natural gas producer, and South Korea the fifth largest importer.
With an economy set to grow at four per cent this year, the realities of a resurgent and world-facing Iran may be the worst prospect for the an oil price recovery.
