Iraq's fuel oil exports head for record year after Oct volumes jump
Iraq ramps up exports as seasonal demand eases, say traders and analysts
Exports on track to breach 18 mln metric tons (380,000 bpd) in 2024
Market watching Karbala refinery production
Adds chart on exports
By Jeslyn Lerh
SINGAPORE, Nov 20 (Reuters) -Iraq's fuel oil exports are on track to hit all-time highs this year after the country ramped up shipments in October, as domestic demand eased while output rose, according to industry sources and ship-tracking data.
The boost in exports of the residue fuel will support oil revenues for the Organization of the Petroleum Exporting Countries' (OPEC's) second-largest producer despite stagnant crude shipments this year, due to production caps under quotas set by OPEC and its allies, or OPEC+.
Higher exports from Iraq will also add to global supply and ease elevated prices in Asia while reducing feedstock costs at refineries.
Exports are set to breach 18 million metric tons (380,000 barrels per day) in 2024, a record-high annual volume that exceeds last year's record of more than 14 million tons, according to calculations based on data from Kpler and LSEG.
Iraq state refiner SOMO did not immediately respond to a request for comment.
Iraq's fuel oil is mainly high-sulphur and straight-run, which can be processed in refineries into higher-value products such as diesel. Most of Iraq's fuel oil cargoes have landed in Singapore and India.
Iraq's fuel oil exports exceeded 2.15 million metric tons in October, the highest monthly volume on record, based on Kpler and LSEG data.
This was coupled with a seasonal decline in domestic demand of about 100,000 barrels per day from the previous month, said Palash Jain, Middle East oil market consultant at FGE.
"Given reduced domestic demand and higher HSFO (high-sulfur fuel oil) cracks, increasing fuel oil exports in October was economically advantageous for Iraq," he said.
The refining margin, or crack, in Asia for producing 380-cst high sulphur fuel oil FO380DUBCKMc1 reached discounts of nearly $2 a barrel at the end of October, the narrowest in more than two years, LSEG data showed.
Discounts widened to more than $5.50 a ton this week as more supply replenishment from various regions, including the Middle East and the West, was expected, traders said.
Production at Iraq's Karbala refinery, which has a capacity of 140,000 barrels per day, also buoyed exports, industry sources said.
"Iraqi fuel oil exports are comfortably heading for a record this year following increased domestic production from the reopening of Karbala refinery," said Roslan Khasawneh, senior oil analyst at Kpler.
A Middle East refining source added that Iraqi exports going forward would also depend on whether the Karbala refinery runs its secondary units at full rates.
Iraq has been curbing crude exports to compensate for overproduction under OPEC+ quotas, processing more crude into products at its refineries, said LSEG Oil Research.
"We believe that in order to remain compliant due to its crude over-production, Iraq has upped its products output," said Emril Jamil, a senior oil analyst at LSEG.
He expects Iraqi fuel oil exports to remain above 2 million tons in November, while FGE's Jain said volumes may taper off from October highs in the next couple of months when Iraq starts winter stockpiling to meet heating demand.
Iraq annual exports of fuel oil https://tmsnrt.rs/4eCHY07
Reporting by Jeslyn Lerh in Singapore; Additional reporting by Maha El Dahan in Dubai; Editing by Florence Tan, Tony Munroe, Kate Mayberry and Nicholas Yong
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
