SOMO: Iraq has the fourth-largest proven oil reserves in the world

Baghdad - INA

The State Oil Marketing Organization (SOMO) explained on Wednesday the importance of Iraqi oil and its vital role in global markets, stating that Iraq has the fourth-largest proven oil reserves in the world, at approximately 145 billion barrels.

The company told the Iraqi News Agency (INA): "The promotion and sale of Iraqi crude oil is taking place in the three main markets (the Asian market, the European market, and the American market), in addition to the African market, through participation in international forums and conferences and holding meetings with major international companies directly or through the official website for online participation. It also invites and provides opportunities for major international companies, under announced terms and within established procedures, to participate in spot cargo auctions (Spot Cargo), which has attracted many international companies to become permanent customers for Iraqi crude oil. It emphasized that the marketing strategy adopted is to focus on markets that offer the highest returns and the best stability in demand, with flexibility in directing shipments according to global price changes to other markets to export the full available quantities of Iraqi crude oil."Regarding the advantages of Iraqi oil, SOMO emphasized that "global crude oils are classified and their quality determined based on their API gravity and sulfur content. Iraqi crude oil produced on this basis is classified as medium and heavy crude oil based on its API gravity. Both types have a high sulfur content, according to the sulfur content standard. It is considered a crude oil with specifications that are "globally required" and conform to the operational plans of refineries that wish to produce specific products based on their needs."

SOMO explained that "among the advantages that help attract buyers are the large and growing demand for medium and heavy crude oils, the stability of production, and the availability of large, stable quantities that guarantee the supply of these refineries under long-term contracts. Its geographical location and low shipping costs make Iraqi oil a favorite in the Asian market, in addition to its fair, competitive price based on market fundamentals."

It noted that "an increase in the API gravity means the potential for producing larger quantities of light, high-value products compared to heavier products. Meanwhile, the higher the sulfur content in crude oil, the less desirable it is for buyers because it requires higher refining costs."

The company continued, "Iraq ranks fifth globally in oil production, with an output of approximately 4.27 million barrels per day, making it the second-largest producer in OPEC after Saudi Arabia. Iraq also has the fourth-largest proven oil reserves in the world, at approximately 145 billion barrels."

It noted that "this ranking reflects Iraq's vital role in global oil markets, as it contributes significantly to meeting global energy demand. In terms of marketing, Iraqi crude oil is an important oil with a good market reputation, as it is used by many international refineries in refining operations and is in relatively high demand."

SOMO added, "Iraqi crude oil is in global demand for refineries in several countries. Iraqi crude oil is exported exclusively to companies that own refineries. However, the majority of companies to which Iraqi crude oil is exported are Asian, most notably China and India, accounting for approximately 70% of the total, and approximately 30% for the other two markets, Europe and the United States combined."

The Company explained, "The Oil Marketing Company adopts a clear strategy in accordance with the best marketing principles adopted globally, based on the principles of transparency and clarity in dealing with international companies specialized in the oil sector. It also relies on medium- and long-term contracts to ensure the marketing of crude oil at the best possible return, in the interest of the country, which relies on revenues generated by the Oil Marketing Company for more than 90% of its budget funding."

SOMO also stated, "The Oil Marketing Company also undertakes the export of products such as naphtha, fuel oil, jet fuel, sulfur, and any other surplus products beyond local needs. Imports vary depending on the quantities and types available for export. The production costs borne by companies investing in Iraqi oil fields can indirectly affect global Iraqi oil prices, as the price of Iraqi crude oil depends on market factors such as supply and demand. Production costs, however, impact Iraq's profit margins and oil investments. However, global prices are determined more by supply and demand factors, competition, and OPEC+ policies in some cases, among others. If costs rise significantly and impact Iraq's production capacity, this could lead to higher oil prices due to a shortage in supply."