A view of West Qurna oilfield is seen in Basra, southeast of Baghdad (file). Iraq, the largest Opec producer after Saudi Arabia, plans to export 3.68mn bpd of Basra crude, traders said yesterday.

Reuters
Singapore


Iraq aims to export a record volume of Basra crude from its southern terminals in October as it ramps up production, adding to a global oil supply glut.
The oil surplus combined with weakening demand has depressed global crude prices and compelled members of the Organisation of the Petroleum Exporting Countries (Opec) to compete for market share.
Iraq, the largest Opec producer after Saudi Arabia, plans to export 3.68mn bpd of Basra crude, traders said yesterday, citing a preliminary loading programme.
The volume, if realised, would beat a previous monthly record of 3.064mn bpd set in July.
Iraq’s decision to split its output into two grades, Basra Heavy and Basra Light, resolved quality issues, enabling the producer to ramp up output, industry sources said.
However, the country tends to allocate more volumes than it can supply each month to avoid disrupting production as it has limited storage capacity to keep excess oil, one industry source familiar with the matter said.
Iraq is unlikely to export more than 2.35mn bpd of Basra Light in October while the volume of Basra Heavy would not exceed 850,000 bpd, he said.
Some of the October cargoes are also expected to be lifted in November instead, according to the source.
Iraq cut official October selling prices (OSPs) for Basra Light and Heavy by 50 cents and $1.10 a barrel, respectively, from the previous month, but these reductions were unlikely to lift spot differentials given the glut, traders said.
In October, Basra Light exports could jump by 800,000 bpd to about 2.8mn bpd, traders said, citing a preliminary loading programme.
The grade has been performing well in the spot market, fetching premiums to its OSP for September-loading cargoes, but the potential jump in supply could depress differentials for cargoes loading in October, traders said.
For Basra Heavy, exports could drop to about 900,000 bpd in October, according to the loading programme.
That would be down from a planned 1.017mn bpd for this month, but remain elevated compared with 600,000 bpd -650,000 bpd in July and August, traders said.
Basra Heavy crude sellers are struggling to find buyers for the high export volumes as refiners in Asia want to purchase and process the grade while similar quality Latin American grades can be had at cheaper prices.
Basra Heavy’s discount has dropped to as low as $2 a barrel for cargoes loading in September.
Basra Heavy’s OSP in the months ahead “will have to drop another dollar to compete with Latin American crude” like Colombia’s Castilla and Mexico’s Maya, a seller said.