In September the U.S. got saw Iraq surpass Saudi Arabia as it’s major crude supplier- a statistic that’s likely to repeat this month.
According to the U.S. Customs Bureau, Iraq exported 18.8 million barrels of crude last month, surpassing Saudi Arabia by roughly 2.9 million barrels. For the last quarter century Saudi Arabia has been the largest supplier to the U.S., and though it remains the world’s biggest exporter, this new trend marks a significant milestone.
Iraq imports to the U.S. have been steadily rising since 2015. That year the Iraqi government, in an effort to maximize its oil revenues, decided to split its oil exports into two different grades. One, known as the new ‘Basrah Heavy Grade’ is produced with a lower gravity and higher sulfer content then it’s lighter counterpart, known as ‘Basrah Light Grade.’ Bashrah Heavy Grade crude is especially popular in industrialized nations, such as U.S., which can buy it at a cheaper rate, yet have the complex refineries necessary to convert it into usable gas and diesel.
Saudi Arabia can blame some of the drop off on the recent OPEC output cuts to reduce global stockpiles, however, statistics show that this shift began well before the cuts were put in motion. Saudi Arabia has increasingly focused on exporting its lighter grades, hoarding its heavier grades for their own use. As a result, the country has notable lost market share in key oil markets such as Asia and the United States.
Despite, Iraq’s new ranking, internally they’ve experienced a procession of disruptions in their supply lines. Particularly in Northern Iraq, where it’s Kurdistan region recently voted in favor of independence causing tensions with the government. Last Monday, exports from Iraq’s Kurdistan dropped to 255,000 barrels per day, down from the usual 600,000 barrels per day through the Turkish Mediterranean port of Ceyhan.
Security sources reported that the Iraqi military will be deploying tanks and artillery near the Krudish-held area to quell the unrest. Additionally, Iraqi Oil Minister Jabar al-Luaibi said they would be increasing oil exports from the southern Basra region by 200,000 barrels per day to try and make up for the shortfall.
Despite the social agitation, Saudi Arabia is behind Iraq by almost 3.2 million barrels in U.S. exports this month.
Article written by HEI contributor Kevin Abbott.