Iraq boosted oil sales to China by a third last month, even as the spreading coronavirus eroded demand.
OPEC’s second-largest producer shipped 1.32 million barrels a day to China in February, the most in at least four years, vessel-tracking data compiled by Bloomberg show. The increase in Iraq’s shipments more than offset reduced exports from the other three biggest Gulf Arab suppliers -- Saudi Arabia, Kuwait and the United Arab Emirates.
The reasons for the 315,000 barrel-a-day surge in Iraqi exports weren’t completely clear, though an increase in production in the country’s Kurdish region as well as at its big southern oil fields were contributing factors, according to Abu Dhabi-based consultant Jaafar Altaie.
“Part of it is good pricing, particularly for Kurdish crude, that is getting Chinese buyers to take advantage regardless of demand destruction,” said Altaie, managing director of Manaar Group.
Global oil demand is evaporating as the coronavirus, which originated in China, cuts airline travel, forces workers to stay at home and hits supply chains. Some analysts and traders are looking at scenarios of zero growth in oil demand this year. Refiners in China asked for less oil from some suppliers for March as storage tanks began to fill.
The virus’ effect on demand is forcing the Organization of Petroleum Exporting Countries and allies including Russia to consider additional production cuts of up to 1 million barrels a day when they meet this week in Vienna. Iraq has exceeded its promised production level for at least the past year, boosting output last month by 90,000 barrels a day to 4.61 million.