IRONY
Solar Could Help Iraq Boost Oil Exports by 250,000 Bpd
Iraq could ramp up its crude oil exports by some 250,000 barrels daily as it saves this amount from local consumption with the help of several solar power projects.
Zawya reported the news, citing a government official, who said that “Iraq consumes nearly a quarter million bpd of crude oil for energy use…switching to renewable energy will save this quantity.”
“This will allow Iraq to export more crude and boost revenues…switching to renewable energy is a significant step, but it does not mean Iraq will shift away from fossil fuels,” Abdul Baqi Khalaf, an advisor at the Iraqi oil ministry, also said.
Solar power currently supplies less than 1% of Iraq’s electricity. Most of it is generated using natural gas, of which a lot is imported from Iran. Iraq also imports electricity from its neighbor directly, or it did, until recently, when the U.S. canceled a sanctions waiver for Baghdad.
Plans for solar are ambitious, and the first steps are already being taken. French TotalEnergies earlier this year broke ground on a 1-GW solar power installation. The first part of the installation, with a capacity of 250 MW, should be ready to start generating by the end of the year.
The Iraqi government plans to build as much as 12 GW of solar power capacity by the end of this decade—up from just 42 MW at the end of 2024.
Meanwhile, earlier this week, oil minister Hayan Abdul-Ghani announced the government had plans to ramp up crude oil production to 5.5 million barrels daily by the end of the year. Iraq’s current production rate averages 4.4 million barrels daily. By 2030, the government in Baghdad eyes production of 7 million barrels daily, according to an earlier statement by an oil ministry official. The plan suggests Iraq wants to make the most of its massive oil reserves and do that sooner rather than later.
By Irina Slav for Oilprice.com
Why Iraq Could Make or Break the Next Oil Price Move
- OPEC+ has begun unwinding its second tranche of cuts ahead of schedule, with a modest 137,000 bpd increase likely in November.
- Iraq’s compliance with steep compensation cuts will be pivotal in maintaining the credibility of OPEC+’s strategy.
- Kazakhstan has backloaded its compensation schedule, proposing to cut by only 35k b/d in December 2025, before increasing to 100 kb/d in January 2026, 300 kb/d in February, 450 kb/d in March, 490 kb/d in April, 550 kb/d in May, and 650 kb/d in June 2026.
Last month, OPEC+ agreed to increase oil output from October by 137,000 barrels per day, a much lower clip compared to the 555,000 bpd increase announced for August and September and 411,000 bpd in June and July. That meant that the group has started unwinding the second tranche of 1.65 million bpd in production cuts more than a year ahead of schedule, having fully unwound the first tranche of 2.5 million bpd since April. The eight members of OPEC+ are set to meet virtually on Sunday, 5th October, to determine the next course of action in unwinding production cuts. The consensus is for a further 137 thousand barrels per day (kb/d) increase in loadings for November, in the absence of any significant news. Media reports in late September claimed that the group might consider an accelerated rewinding programme, with the remainder being divided into three monthly increases of 500 kb/d. Judging by the still bearish sentiment in oil markets, the second scenario would likely result in an oil price selloff with concerns of oversupply returning to the forefront.
However, it’s more likely that OPEC+ will stick to its former plan, in which case all eyes will turn to Iraq. As expected, OPEC+ outlined the proposed compensation cuts for overproduced volumes by six members, led by Iraq, which has proposed an immediate 130 kb/d adjustment from August 2025 through January 2026, before slowing to 122 kb/d in June 2026. Commodity analysts at Standard Chartered have noted that Iraq will do most of the heavy lifting in OPEC+’s latest round of unwinding, with the country’s cuts alone nearly enough to neutralize the increase by the rest of the members.
In contrast, Kazakhstan has backloaded its compensation schedule, proposing to cut by only 35k b/d in December 2025, before increasing to 100 kb/d in January 2026, 300 kb/d in February, 450 kb/d in March, 490 kb/d in April, 550 kb/d in May, and 650 kb/d in June 2026 for a total of 2.63 mb/d. The analysts have predicted that Iraq's compliance will be critical for setting market sentiment around the legitimacy of compensation cuts.StanChart notes that Kazakhstan’s plan to backload most of its cuts goes contrary to previous plans to frontload them. Further, the analysts have pointed out that Iraq’s total contribution includes exports from the Kurdistan region (KRG), which is likely to return from suspension imminently, further complicating adherence to compensation cuts.
Meanwhile, the UN has reimposed sanctions on Iran, completing the ‘snapback’ process that was initiated by the UK, France and Germany, marking the effective end of the 2015 nuclear deal (JCPOA). Last week’s meetings on the subject by the United Nations General Assembly (UNGA) were largely unproductive, forcing the UN to restore six former resolutions, including requiring Iran to terminate nuclear activities and enrichment of uranium. However, the most significant for the oil market is a resolution that authorizes the seizure of vessels, including oil tankers, suspected of arms or technology smuggling. Historically, many countries have in the past been reluctant to exercise this seizure authority because it often results in tit-for-tat vessel seizures. According to Kpler data, Iran currently exports ~1.5 million barrels of crude per day, down from 2.3 mb/d it managed before the latest raft of sanctions but more than triple the volumes it did at the end of Trump’s first term in office. A cross-section of analysts has argued that the snapback will have little effect in limiting Iran’s oil exports or its economy:
"I see a limited economic impact, especially when it comes to energy," Rachel Ziemba, senior advisor at political risk consultancy Horizon Engage, told Argus Media. "This is due to the limited scope of the [returning] UN sanctions, the extent of existing US sanctions, and the breadth of the illicit trading relations," she added.
Meanwhile, Europe’s gas stores continue filling up, with inventories rising by 0.84 billion cubic metres (bcm) w/w to reach 96.22bcm over the past week. Despite high demand due to the cold weather, Europe’s gas has been trading in a narrow range around €31–€33 per megawatt-hour over the past week to settle at €31.01/MWh in Thursday’s session. EU inventories currently stand at 82.3% of total capacity, with Germany at 76.6% while France and Italy are above 90%.
By Alex Kimani for Oilprice.com
U.S. Backs Historic Deal to Keep Kurdish Oil Moving
The U.S. Administration wants to ensure that the just-restarted oil exports from Iraq’s semi-autonomous region of Kurdistan continue to flow via pipeline to Turkey in the long run, an anonymous official at the U.S. Department of State told Bloomberg on Friday.
The Trump Administration is working toward the goal of keeping Kurdistan’s crude flowing in the long term to boost the Iraqi economy, counter Iran’s influence in the region, and benefit U.S. companies operating in Iraq, according to the official.
The U.S. has played a role in the deal that allowed the resumption of the exports from Kurdistan, the official told Bloomberg.
U.S. Secretary of State Marco Rubio commented last week on the agreement to restart exports, saying on X “We welcome the announcement that the Government of Iraq has reached an agreement with the Kurdistan Regional Government and international companies to reopen the Iraq-Türkiye pipeline. This deal, facilitated by the United States, will bring tangible benefits for both Americans and Iraqis while reaffirming Iraq’s sovereignty.”
Kurdistan’s oil exports resumed on Saturday, September 27, following a two and a half year suspension of the flows via the pipeline from northern Iraq to the Turkish Mediterranean coast.
Eight foreign companies operating in Kurdistan have signed agreements with the Kurdistan Regional Government (KRG) and the Federal Government of Iraq to enable the restart of international crude exports from Kurdistan.
This agreement paved to way to the restart of exports, which were halted for two and a half years, after they were shut in in March 2023 due to a dispute over who should authorize the Kurdish exports.
The federal government in Baghdad and the regional Kurdish government in Erbil squabbled for more than two years over who should be responsible for the oil exports and the subsequent revenue distribution.
Under the agreement, hailed as historic by Iraq’s federal government, KRG is delivering about 190,000 barrels per day (bpd) of crude to Iraqi state marketing company SOMO. Kurdistan is also entitled to keep 50,000 bpd to use for local consumption.
By Tsvetana Paraskova for Oilprice.com
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