Iraq is starting to reduce its oil production by 23%

Iraq announced a 23 percent drop in production on Friday.  Sources close to Basra Oil Company confirmed that the company has been reducing output at its oil fields since May 1. 

The company said in the statement that Iraq shows full commitment to the decision of OPEC and its allies to reduce crude oil production to counter the crisis of falling oil prices on world markets. 

Basra Oil Company currently produces 3 million barrels per day.

The Iraqi Ministry of Petroleum has previously stated that the country’s total oil exports in April averaged 3.438 million barrels per day, and its oil revenues reached less than half and $ 1.42 billion. Oil is Iraq’s most important source of income.

The country faces a problem with its oil output reduction

OPEC’s second-largest oil producer has been facing an economic crisis. This was due to falling oil prices and an agreement to cut production. 

According to Tasnim news, major companies such as British Petroleum, ExxonMobil, Luke Oil, and Annie have a large share of Iraq’s oil production. Still, they have opposed the country’s request to reduce output.

 If Iraq fails to comply with its commitment to reduce output fully, OPEC Plus’ efforts to cut production by 9.7 million barrels per day will be ineffective. This reduction in production aims to support oil prices, which have fallen due to falling demand amid the coronavirus outbreak.

Basra oil official said that the negotiations with foreign companies are still ongoing. Moreover, they are trying to reach an agreement with them to reduce production without putting financial pressure on Iraq. He said that the responses from two companies operating in Basra had been positive. 

Iraq’s oil revenues halved

The Iraqi Ministry of Oil has ordered Basra Oil Company to reduce its oil production by at least 700,000 barrels per day. These oil fields also include fields run by Iraqi national oil companies. 

According to Iraqi officials, most of the production cuts will be borne by Basra’s oil fields in the south. They have been developed by foreign companies. These include the Ramile oil field, which is controlled by British Petroleum and produces about 1.45 million barrels per day. As well as the Qarneh Gharb 1 oil field. ExxonMobil operates the oil field and provides more than 450,000 barrels per day.

Basra oil officials say it is challenging to reduce production in the region’s small oil fields because last year, they pushed them to minimize their production according to a previous agreement of OPEC and its allies.

The decline in output from Kirkuk’s oil fields could not be as much as 320,000 barrels per day. As most of its production is used to run small refineries in the north of the country.