Iraq Confident It Can Defend Market Share in Asia

Iraq is confident it can defend its crude oil exports to Asia against an influx of cheap Russian oil into the region.

The country's State Oil Marketing Organization (Somo) has actually received requests for more oil from its Asian customers, Somo chief Alaa al-Yasiri told the Iraqi News Agency (INA).

Russia has stepped up its exports to Asia this year — offering deep discounts to buyers in India and China — as customers in Europe have backed away from Russian oil following Moscow's invasion of Ukraine in February.

Al-Yasiri acknowledged that Russia is competing against Iraq for sales into in Asia, but argued that China and India "are not willing to risk abandoning Iraqi crude oil" in case ties between Russia and Europe improve in the future, with an accompanying recovery in flows of Russian oil to Europe and a decline in sales to Asia.

"So far none of our customers has requested to cancel the contract. On the contrary, there is a request to increase quantities in Asia," he said.

Energy Intelligence data suggest more Iraqi oil went East in August — 65% of total exports for that month versus 58% in July. That marked a return to normal levels, largely as a result of an increase of 200,000 b/d in flows to China.

Nevertheless, Iraqi sales to China so far this year have fallen relative to last year's levels, according to data from Energy Intelligence, Kpler and China's customs service.

Saudi exports to Asia also fell during the first seven months of 2022 relative to the same period of 2021.

However, unlike Saudi Arabia, Iraq looks to be on track for a second successive year of lower crude exports to China, while the United Arab Emirates and Kuwait have enjoyed many years of steadily rising exports to China.