Iraq revenues hit by dropping global oil prices

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An Iraqi government spokesman said on Monday oil revenues dropped by 17.6% from May to June due to a decline in prices in the international market and soaring domestic needs. Oil revenues make up about 95% of the fragile government’s budget.

The country’s oil production levels are yet to reach the pre-US invasion. Some analysts believe Baghdad is expected to overtake Iran as the second-largest exporter in OPEC soon, thanks to the new EU sanctions took effect on Sunday.

Oil Ministry spokesman Assem Jihad said Iraq earned $6.453 billion in June, with an achieved average price of $90 per barrel. May’s revenues stood at $7.831 billion with an average price of $103.039 per barrel. Oil exports yielded $45.269 billion in the first half of 2012, including June’s figures.

The spokesman added that June’s oil exports averaged 2.403 million barrels a day, down from an average of 2.452 million barrels in May as the ministry diverted some production to refineries. Domestic demand in Iraq soars during the hot summer months, as private generators provide a big chunk of electricity to houses.

Iraq set a budget of $100 billion in 2012, much dependent on projected revenues from oil exports of 2.6 billion barrels daily at $85 per barrel.

Iraq sits atop the world’s fourth largest proven reserves of conventional crude of about 143.1 billion barrels. However, decades of US-led sanctions, war and occupation, and looting have battered the sector.

Baghdad awarded 15 oil and gas deals to international energy companies, the first major investments in the country’s energy industry in more than three decades.

Iraq’s daily oil production stands slightly over 3 million barrels with plans to reach 3.4 million barrels by the end of this year.

The country initially set a target of 12 million barrels a day by 2017, but it is now considering a downward revision to fewer than 10 million barrels, in part because of infrastructure bottlenecks.

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