Iraqi Crude Finds Favor in Europe

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Iraq is one of the Mideast producers benefiting most from surging European demand for non-Russian crude. In term contract negotiations for 2023 with Iraqi state oil marketer Somo, some European customers asked to increase their allocations fourfold. Somo has also succeeded in dissuading key Mediterranean buyers from taking rival Kurdish barrels and is now mulling new marketing partnerships. But Opec’s second largest producer faces stiff competition from regional peers Saudi Arabia and the United Arab Emirates, who are stepping up their trading operations. Until last year, the European crude market was something of an afterthought for Mideast producers, which prioritized the premium Asian growth market. That changed after Russia’s invasion of Ukraine began pushing Urals east. “We have contracts with many companies, big companies with refineries in Europe. We received requests to increase the contractual quantities for these companies, starting from June, to compensate for the absence of Russian crude,” Somo’s head of market research, Mohammed Saadoun, told Energy Intelligence. Ship tracking data bears out his claim. Basrah exports to Europe averaged 574,000 barrels per day from June to December, compared with 330,000 b/d in 2021. Underlining the shift in oil market dynamics, Saadoun said 48% of Iraq’s destination-free Basrah cargoes last year went to Europe. Those cargoes, which belong to equity producers and can be sent wherever demand is strong, accounted for 9% of total Basrah exports in 2022.

Oil Supply, Oil Demand, Oil Trade, Oil Spot Markets, Oil Term Contracts, Opec-Plus Supply
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