Wednesday Iraq Economic News Highlights 10-12-22
Wednesday Iraq Economic News Highlights 10-12-22
Middle East Eye: This is what OPEC + members want from the decision to reduce oil production
Economie 2022-10-12 | 04:15 Source: Arabic 21 601 views Alsumaria News – Economy On the fifth of October, OPEC + members announced a plan to reduce oil production by about two million barrels, starting in November, and thus, this will be the first major oil cut since 2020.
The actual cut of less than half of that was generally met with indifference by the oil markets, which strengthened only slightly. The actual impact on the market from the production cut will be less than the cut announced in the headlines.
Since many members of the group are producing below their targets, the net production cut is expected to range between 600,000 and 900,000 barrels per day, which is not a small number if we take into account recent trends, but nonetheless remains below the level implied by the headlines. .
According to a report by Middle East Eye, the effects of production cuts on energy policies, on US-Gulf relations and on Western-Gulf relations are much greater. This is because this decision exacerbates the mistrust among these major economic countries about energy policy and the ability to deal with the expected problems arising from the reduction of Russian fuel imports and some of the long-term issues related to energy transfer and investment.
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If we exceed the production cut itself, there is a political and geopolitical positioning surrounding the announcement, which highlights the increasing fragility and instability of the market, and we are on the verge of the boycott that the European Union intends to impose on Russia The G7 intends to impose an upper limit on the price of Russian oil.
Slowing oil demand
Despite their attempts to focus on the “technical” nature of the decision, the OPEC + and US ministers made little effort to stop the escalation, which means that the economic and trade reasons partly for the production cut, including the slowdown in oil demand around the world, Lost in a sea ofmutual accusations and fears about the future.
On the topic of demand, the OPEC+ cuts reflect concerns about slowing global demand, especially by China Which is still constrained by selective closures in response to the Covid pandemic, weak consumer demand, and the distress that befell the real estate market in it.
There is no doubt that the warning that the reduction will continue until the end of 2023 means a significant retreat from the previous OPEC vision, which stated that strong demand would boost demand for OPEC oil next year.
If we take into account some of the decline in demand earlier this summer, some of the reduction reflects the conventional wisdom, even if prices are far from being low. Oil producers place some of the blame on other parts of the energy market, including higher natural gas prices, which are exacerbating weak global demand.
As central banks find themselves forced to raise prices further as a defensive measure, including in advanced economies, the risk is that the global recession will become more severe and will undermine demand for oil.
They will, in general, continue to favor higher costs over lower production, particularly when in many countries there is no inelastic selling-out. Faced with the prospect of lower revenues after a strong start in early 2022, they chose to prioritize raising production costs per barrel over contributing to the market.
The idea that a higher price will stimulate more investment within OPEC+ countries seems less realistic given that issues related to gradual increases in supply rates are far from purely economic. It includes local issues in a number of producing countries, as well as increasing domestic demand in Africa.
Retain membership Russia
Some members of OPEC Plus, especially the United Arab Emirates, have added to capacity that is still in excess of production, and some non-OPEC countries, such as the United States, are also adding to imports as dictated by commercial justifications, but this is more urgent in the case of natural gas.
This reflects the lessons of the Asian financial crisis and the global financial crisis, in favoring the option of keeping big producers over one man's heart.
In addition, they also mean to point out their unwillingness to facilitate the G7's efforts to extract Russian oil. In contrast to smaller countries such as Iran and Venezuela, there is no spare capacity worldwide that would compensate for Russian oil.
The meeting reinforced the choice favored by OPEC leaders, especially those in the Gulf Cooperation Council countries, which is to stay Russia Inside the group rather than outside it, because on the outside it might play the role of the spoiler.
The ongoing sanctions against these two countries also raise concerns. Although additional volumes are not welcome at this time, the West's continued use of sanctions to restrict energy imports remains a worrying concern for producers.
Despite the exaggeration of allegations that the Saudis, Emiratis and other members of the OPEC + group are biased in favor of Russia However, it is clear that they are not giving up.
These are just some of the many countries that would like to maintain relations with Russia At the same time, the United States has a desire to operate within the gray zone, engaging in commercial and financial dealings that are not a direct violation of US sanctions, but are dangerous, and may in the future become subject to restriction.
This includes a decision to stick to joint venture forms and projects Russia Instead of getting out of it, despite its complicity in its war. It also includes increasing its role as a transhipment site, as is the case with the United Arab Emirates.
For India and Turkey, trade with Russia. Most of this trade is still legal, but it is difficult, and these countries will be subjected to more pressure to comply with the export provisions required by the Group of Seven, and its scope is increasing.
Relations with the United States
The group of producers has no interest in facilitating the creation of a price-fixing mechanism from the purchasing countries, and in particular rejects a mechanism that might be used for other geopolitical purposes. In addition, they worry about the uncertainty about launching new standards-based and due diligence provisions, which could add other costs to the market.
The G7's approach to the ceiling affects the current dominance of insurance and other services provided to the oil trading sector. It is likely that new players will emerge to provide at least some of these insurance services.
Despite their suspiciousness about price ceilings, able OPEC+ members will likely seek to benefit from trading, buying fuel at discounted prices from Russia Then they sell it across the world market at higher prices. However, the possibility of an official mechanism for this remains a source of concern.
However, this decision brings to the surface some grievances and disagreements that have been accumulating for some time. Many members of OPEC Plus, especially in the Gulf Cooperation Council (GCC), feel that time has proven their position that the energy transfer targets of the European Union and the United States will result in a decline in energy investments. They also expressed concern about the ability to use strategic oil reserves [/url], which made them care more about self-protection and maintain less alliance with the West.
Meanwhile, the United States continues to expect security relations to mean alliance and support for foreign policy and economic policy objectives. However, the relationship is likely to deteriorate more and more, and it may become more contractual in the areas of actually common interests.
The noise from Washington about reconfiguring the relationship will increase, especially whenever there is a discussion about arms sales and the use of anti-trust tools in dealing with OPEC and regional policies. As the Gulf Cooperation Council states, and more broadly their Western Asian counterparts, seek shelter and a way out in a world that is no longer unipolar, they will test those limits.
However, it is also possible that there will be a course correction, as the United States is now prioritizing its efforts to weaken the Russian government and its military capacity, please stop the conflict in Ukraine, in addition to its focus on competing with China.
Non-OPEC producers, such as Qatar, may find improvement in their situation, although they are also self-protective and seek the best opportunities for development in energy and other areas. These trends are likely to add to instability, not only in oil markets but also at the geopolitical level, increasing the risks of using harsh tools such as secondary sanctions. LINK
International Monetary: Iraq Is The Fastest Arab Economy In 2022
Economie 2022-10-11 | 12:42 1,895 views The latest report of the International Monetary Fund revealed that Iraq will be the fastest Arab economy in 2022, with growth rates of 9.3%.
The International Monetary Fund[/url] had revealed its expectations for the economy, as global economic activity is witnessing a widespread slowdown that exceeded expectations, with inflation rates exceeding their levels recorded during several previous decades.
This report, based on accurate scientific data, raises hopes of Iraq's ability to recover and advance economically despite the crisis that the global economy is going through as a result of the continuing war in Ukraine and its worrying repercussions on the economies of Western countries. LINK
Parliamentary Finance Forms Sub-Committees To Follow Up The Disbursement Of Emergency Support Law Funds
Economie 20:22 - 10-11-2022 Today, Tuesday, the Parliamentary Finance Committee announced the formation of sub-committees to follow up the implementation of the disbursement of the emergency food security support law, while confirming the hosting of 3 ministers and governors next week.
Committee member Ahmed Mazhar al-Jubouri said, "The committee is following up on the implementation and disbursement of the emergency food security support law, and hosting the terminated Finance Ministers, Ihsan Abdel-Jabbar, and Planning Khaled Battal, to discuss the mechanism of disbursing funds for the law."
He added, "The Finance Committee has formed sub-committees within it to follow up on the disbursement of the law's money, and next week it will host the ministers of commerce, agriculture, electricity and governors, to clarify about the funds that have been funded to ministries and governorates and the mechanism of exchange."
And the Ministry of Planning announced, last Sunday, the imminent release of funds for the governorates within the Food Security Law.
Planning Minister Khaled Battal said, "The Parliamentary Finance Committee hosted us in the presence of the First Deputy Speaker of Parliament, Mohsen Al-Mandalawi, to discuss the mechanism for implementing the Food Security Law in the part related to the investment plan of the law," noting that "there is a problem of launching funding by the Ministry of Finance."
He added, "We explained to the Finance Committee that the Ministry of Planning has fully accomplished what it was required to do, and we included the projects, and we spoke with the Ministry of Finance in the presence of the President of the Financial Supervision Bureau, and there is a common understanding and clarification of some legal paragraphs in which there was a misunderstanding by some departments of the Ministry of Finance." Soon, the money for the provinces will be released."
He added that "there is 50%, according to the law, of the money being released by this government and 50% being released by the next government," explaining that "the original in today's meeting is to speed up the procedures for releasing 50% of the money, and it will be launched soon."
Battal stressed that "the Ministry of Planning has completed the launch of the allocations to the governorates," noting that "according to the deliberation that took place today, the problem is in the understanding of the Accounting Department in Finance for some legal paragraphs, and it was clarified by us and by the head of the Oversight Bureau and things are on their way to solution."
Iraq And OPEC .. How Will It Be Affected By The Production Cut And What Fields Are Included?
Reports Economy News-Baghdad Next month, Iraq will begin to cut 220 thousand barrels per day from its production of 4.65 million barrels per day, in response to the OPEC Plus agreement.
The OPEC Plus alliance consists of 20 countries, producing 43.85 million barrels per day, and decided to reduce production by two million barrels, in order to reduce the supply in the oil market, which exceeds 105 million barrels per day, while demand is 102.4 million barrels.
In a statement to Al-Iqtisad News, the oil expert, Hamza Al-Jawahiri, believes that the goal of the latest OPEC Plus decision is to achieve stability in the oil market and not to drop oil prices.
The OPEC Plus countries aim to keep the price of a barrel of oil above $80 to support their budgets and implement infrastructure projects in their countries.
An informed source told "Economy News", that "Iraq will reduce the national fields in the south, specifically in the governorates of Basra, Dhi Qar, Maysan and Wasit," noting that "the volume of exports may be affected very slightly."
He pointed out that "the fields supervised by international companies, which are called licensing roving fields, will not allow the companies any reduction, due to the international energy crisis and the need for these companies to use oil in their refineries."
The government spends 9 trillion dinars per month to finance the budget, as it needs the price of a barrel of oil to be $70 to achieve the fiscal budget revenues.
OPEC Plus decided to reduce production by 4.7%, as Iraq’s production currently stands at 4.65 million barrels per day, including the production of the Kurdistan region’s oil, which exceeds 550,000 barrels per day, as it requires the region to reduce its production by 11.8%, or about 65 thousand barrels per day.
For his part, the Saudi oil expert, Muhannad Al-Shahbol, says that "Iraq's history in the OPEC Plus agreement shows that it is a country that is not committed to the agreement, due to the political nature, as the Kurdistan region is not subject to the federal government."
The latest OPEC Plus decision is the second-highest reduction it has taken in its history, after cutting 10 million barrels per day in May 2020 after oil prices fell to less than $30, and gradually reduced it.
Some OPEC Plus countries will not be able to reduce their production, as a result of its decline to large levels, such as Algeria, Angloa, Kango and others, while Iraq is required to reduce 220 thousand barrels per day out of its production of 4.65 million barrels.
Most of the oil-consuming countries have witnessed a significant increase in the prices of oil derivatives since the beginning of this year, such as France 77%, America 84% and Britain 70%.
Six countries in OPEC Plus out of 20 countries will decrease more than 1.56 million barrels, due to their high production, including Iraq, Saudi Arabia, Russia, Kuwait and the UAE.
76 . views Added 10/12/2022 - 11:11 AM Update 10/12/2022 - 1:15 PM