Oil prices plunge as Iraq signals higher crude exports
Oil prices plunge as Iraq signals higher crude exports
LONDON (Reuters): World oil prices fell again on Tuesday after Iraq said it would be able to raise crude exports under a new phase of the United Nations oil-for-food exchange.
Benchmark North Sea Brent blend crude oil futures for July delivery fell 22 cents to US$14.98 a barrel after the announcement on Monday by the Iraqi oil minister.
Amir Muhammed Rasheed said his country was planning to increase sales under the sixth 180-day phase of the U.N. deal to an average 2.2 million barrels a day (bpd).
Baghdad had exported an average of two million barrels daily in the fifth phase which ended last week. It has been able to almost double exports since the beginning of last year.
Rasheed said Baghdad planned to start reusing in a "short time" its export line via Syria to complement deliveries through Turkey and Iraq's Gulf coast. He said the line would supply 300,000 bpd to Syria's Mediterranean coast but gave no indication of exactly when it would reopen.
The United Nations has said if Iraq gets close to the $5.26 billion cap for sales under the sixth phase it will reconsider the limit in order not to disrupt humanitarian supplies.
Preliminary loading schedules on Tuesday from Iraq's State Oil Marketing Organization SOMO showed heavy volumes for the first half of June, industry sources said.
The first Iraqi cargo under the renewed U.N. program was loading on Tuesday at the Turkish port of Ceyhan bound for Spanish refiner Repsol, traders said.
Oil prices are on the slide again despite OPEC's efforts to reduce stockpiles by reining in supplies. Brent surged from less than $10 in February to $17 in early May after the Organization of the Petroleum Exporting Countries announced output curbs.
"Bearish sentiment is being compounded by the refinery run cuts which are being seen across the globe," said Lawrence Eagles of brokers GNI.
Italy's ERG on Tuesday became the latest European refiner in recent weeks to announce reduced refinery operations to combat sickly profit margins caused by low petroleum product prices.
ERG said it was slicing crude use during June at its Sicilian Priolo refinery, one of southern Europe's largest, following similar moves in recent weeks by BP Amoco and Shell.
In Singapore, Shell and Mobil both said they were cutting refinery operations.
Pressure on oil prices has also come in recent weeks from Russia where unexpectedly large export volumes have emerged as a result of the weak ruble and falling domestic consumption.