The world’s biggest oil-exporting region may lose billions of dollars in annual revenue when an obscure United Nations requirement for ships to burn cleaner fuel takes effect next year, Bloomberg reported.
This comes as Iraq’s oil exports averaged 3.726 million barrels per day (bpd) in December, a significant increase from the previous month, according to the oil ministry.
Revenues could drop by $5 a barrel starting in the second half as refiners and shippers prepare for the change, Citigroup Inc. says. Some traders expect a less dramatic slide, but even Saudi Energy Minister Khalid Al-Falih, whose country ships more oil than any other, sees a $1 reduction for some grades.
Harry Tchilinguirian, head of commodities strategy at BNP Paribas SA, said lighter US oil could be blended with Middle Eastern crude and therefore boost demand for heavy-sour barrels.
The price impact on Saudi Arabia, Iraq, Iran, Kuwait, the United Arab Emirates, Qatar and Oman should lessen over the next several years as refiners upgrade their facilities to produce more of the low-sulfur fuel.