Iraq is selling more crude oil to its major customer, China’s Unipec, just before production cuts agreed with OPEC and other producers are scheduled to be in effect, people familiar with the matter say.
The Unipec contract was signed just before the Organization of the Petroleum Exporting Countries (OPEC), of which Iraq is a member, agreed with other producers led by Russia to cut output by as much as 1.8 million bpd aiming to reduce a global fuel supply overhang and prop up prices.
“If Iraq increases its sales to China while others have to cut back or just hold their volumes steady, Iraq will inevitably gain market share in what is arguably the most important oil market,” said a trader who specializes in sending crude to China but is not allowed to speak publicly.
Iraq is OPEC’s second-biggest producer behind Saudi Arabia and now ranks third among crude suppliers to China – after Russia and Saudi Arabia – having recorded a 15 percent year-on-year jump to about 723,000 bpd between January and October.
In the first 10 months this year, crude imports from Iraq rose 24 percent to 784,000 bpd in India, making Iraq the second-largest crude supplier after Saudi Arabia.
Iraqi crude exports to the United States have more than doubled in the first nine months of 2016 from the same period a year ago to nearly 350,000 bpd as Venezuelan supplies declined, data from the Energy Information Administration showed.