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Iraq Is Preparing For Higher Oil Demand

Iraq is already scheduling crude oil shipments for delivery in March thanks to strong demand, the deputy head of the State Organization for the Marketing of Oil, or SOMO, told media in Baghdad, as quoted by Reuters.

Ali Nizar also told media that Iraq's oil exports were stable this month and were going to be slightly higher next month, Bloomberg reported.

For this month, the average daily rate of exports is seen at 3.2 million bpd, the SOMO deputy director-general said, adding it would likely increase to 3.3 million bpd in February. These are the figures from Iraq proper only, excluding exports of 340,000 bpd from the Kurdistan autonomous region.

Asked about oil prices, the SOMO official declined to give a specific projection, saying it was too early to say whether benchmark crude would reach $100 per barrel.

Separately, however, Reuters reported last week that some in OPEC believe oil could indeed reach and even top $100 per barrel. The drivers behind a continued rally would be sustained demand and tight supply resulting from the cartel's limited spare capacity.

The last time Brent crude traded at $100 and more was eight years ago. During that cycle, Brent hit $110 per barrel before slumping to less than $50 in January 2015.

"There will be increasing pressure on oil prices in at least the next two months," one OPEC source told Reuters, adding, "Under these circumstances, the price of oil may be close to $100 but it will certainly not be very stable."

Due to constraints of various nature, OPEC has been falling short of its own production targets for months now. In December, the cartel reported an output increase of just 170,000 bpd, while its quota was for a boost of 253,000 bpd, per the OPEC+ production control agreement that stipulates a 400,000-bpd output increase for the extended cartel.

By Irina Slav for Oilprice.com

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