Iraq’s oil revenues fell by almost half in March compared to February’s figures, Baghdad officials said Wednesday, underscoring the financial difficulties ahead.
Oil revenues account for roughly 90 percent of Iraq’s annual budget.
Iraq’s oil revenues for the month of March were $2.98 billion, with an average export of 3.390 million barrels per day (bpd).
By contrast, Iraq’s oil revenues for the month of February stood at $5.52 billion, with an average export of 3.391 million bpd.
According to oil ministry figures, Iraq increased oil production in March by around 7 million barrels compared to February. However, as world oil prices tumbled, its revenues actually fell.
A barrel of Iraqi oil sold for an average of $28.436 in March, down from an average of $51.374 in February.
World oil prices almost halved last month as a result of a standoff between oil producing rivals Saudi Arabia and Russia, floating just shy of $20 a barrel.
For years, the oil giants coordinated their production benchmarks through a deal known as OPEC+. When global demand began to shrink as a result of the coronavirus outbreak, Saudi Arabia proposed cutting production to stabilize the price.
Russian oil companies, struggling to find buyers under US sanctions, refused to cut production. Saudi Arabia responded by flooding the market with cheap oil to strong-arm the Russians.
For smaller oil producing nations like Iraq, the standoff has proved disastrous. Already locked in a political crisis and battling an outbreak of coronavirus, Iraq will be forced to borrow or spend its foreign reserves to keep its head above water.
Last month, Haitham al-Jiboury, head of the Iraqi parliament’s finance committee, told Rudaw English he foresees a deficit of around 50 trillion dinars ($42 billion) in the 2020 budget plan.
If oil prices remain this low, that deficit could rise to more than 100 trillion dinars.
“If the current crisis of oil continues, the Iraqi parliament will be unable to approve the 2020 budget plan,” Jiboury said.
Public sector workers in Iraq and the Kurdistan Region are concerned they will not be paid owing to the disruptions caused by the COVID-19 lockdown and political disarray.
Iraq has not had a fully-functioning government since last December, when caretaker Prime Minister Adil Abdul-Mahdi resigned in the face of mass protests over unemployment, corruption, and the lack of basic services.
His replacement, Mohammed Tawfiq Allawi, also resigned in early March after he failed to win parliamentary approval for his cabinet.
The task has now fallen to former Najaf governor Adnan al-Zurfi – an unpopular choice among Iraq’s powerful Iran-backed Shiite blocs and anti-government protesters.
The deadlock has hobbled Baghdad’s response to protester demands and post-war reconstruction. Conflict and insecurity continue to blight the country.