Shafaq News/Iraq's fuel oil exports are on track to hit all-time highs this year after thecountry ramped up shipments in October, as domestic demand eased while outputrose, according to industry sources and ship-tracking data.
The boost inexports of the residue fuel will support oil revenues for the Organization ofthe Petroleum Exporting Countries' (OPEC's) second-largest producer despitestagnant crude shipments this year, due to production caps under quotas set byOPEC and its allies, or OPEC+.
Higherexports from Iraq will also add to global supply and ease elevated prices inAsia while reducing feedstock costs at refineries.
Exports areset to breach 18 million metric tons (380,000 barrels per day) in 2024, arecord-high annual volume that exceeds last year's record of more than 14million tons, according to calculations based on data from Kpler and LSEG.
Iraq staterefiner SOMO did not immediately respond to a request for comment.
Iraq's fueloil is mainly high-sulphur and straight-run, which can be processed inrefineries into higher-value products such as diesel. Most of Iraq's fuel oilcargoes have landed in Singapore and India.
Iraq's fueloil exports exceeded 2.15 million metric tons in October, the highest monthlyvolume on record, based on Kpler and LSEG data.
This wascoupled with a seasonal decline in domestic demand of about 100,000 barrels perday from the previous month, said Palash Jain, Middle East oil marketconsultant at FGE.
"Givenreduced domestic demand and higher HSFO (high-sulfur fuel oil) cracks,increasing fuel oil exports in October was economically advantageous forIraq," he said.
The refiningmargin, or crack, in Asia for producing 380-cst high sulphur fuel oil reacheddiscounts of nearly $2 a barrel at the end of October, the narrowest in morethan two years, LSEG data showed.
Discountswidened to more than $5.50 a ton this week as more supply replenishment fromvarious regions, including the Middle East and the West, was expected, traderssaid.
Productionat Iraq's Karbala refinery, which has a capacity of 140,000 barrels per day,also buoyed exports, industry sources said.
"Iraqifuel oil exports are comfortably heading for a record this year followingincreased domestic production from the reopening of Karbala refinery,"said Roslan Khasawneh, senior oil analyst at Kpler.
A MiddleEast refining source added that Iraqi exports going forward would also dependon whether the Karbala refinery runs its secondary units at full rates.
Iraq hasbeen curbing crude exports to compensate for overproduction under OPEC+ quotas,processing more crude into products at its refineries, said LSEG Oil Research.
"Webelieve that in order to remain compliant due to its crude over-production,Iraq has upped its products output," said Emril Jamil, a senior oilanalyst at LSEG.
He expectsIraqi fuel oil exports to remain above 2 million tons in November, while FGE'sJain said volumes may taper off from October highs in the next couple of monthswhen Iraq starts winter stockpiling to meet heating demand.
(REUTERS)