The revival in Iraqi oil output has stalled. Again. The Oil Ministry’s official target for 2014 is four million barrels a day by the end of the year, but it may be as low as 3.4 million, about the same as last month, according to the average of six analyst estimates compiled by Bloomberg News.
Government forecasts are also getting less optimistic, with Thamir Ghadhban, an adviser to the prime minister, estimating 3.75 million barrels in an interview earlier this month.
Violence and conflict are pinching growth for OPEC’s second-biggest member. While Iraq has added about 2 million barrels to daily production since 2003, the year of Saddam Hussein’s ouster, attacks on pipelines and an oil-revenue dispute with the semi-autonomous Kurdish region are diminishing the country’s dependability as a supplier. This is also contributing to making oil more expensive, VTB Capital said.
“Iraq always seems to be the producer of the future,” said Mike Wittner, head of oil market research at Société Générale SA in New York.
“The entire world has been upbeat on Iraq’s prospects for the last couple of years. But it’s not steady growth. They have to get the security situation sorted out, or that’s going to continue to hamper them.”
Iraq’s exports to Europe have been curbed since early March because of sabotage on its northern pipeline to Turkey. Supplies from the Kurdish region have been mostly halted due to the dispute with the central government. Prime Minister Nouri al-Maliki may need to form a broad coalition to remain in power after last month’s parliamentary elections, potentially slowing oil-policy decisions.
Brent crude, the global benchmark, is trading above $100 a barrel for a 23rd consecutive month, the longest stretch since records began in 1988. Prices will average more than $100 this year and in each of the next three years, according to analyst estimates compiled by Bloomberg.