Iraq has reduced annual supplies of Basra crude oil to several Indian refiners by up to 20% for 2021, industry sources said, in a rare move by OPEC`s second-largest producer which is trying to meet its obligations under the group`s production deal.

Iraq was the top oil supplier to India in 2020 and a reduction in long-term Basra crude supplies could erode Baghdad`s market share in the world`s third largest oil importer and consumer.

Iraq`s Oil Marketing Company (SOMO) has reduced the 2021 Basra term volumes to several Indian refiners by between 10% and 20%, the sources said.

SOMO did not immediately respond to a Reuters request for comment.

"We never expected Iraq to cut volumes. We may have to look for alternatives like tapping the spot markets," said a source at one of the Indian refiners.

"This is happening at a time when we are preparing to increase run rates as fuel demand is recovering." 
SOMO told Indian refiners that it had reduced annual contracts for all Asian buyers to compensate for higher volumes produced in the previous year, one of the sources said.

Iraq has been striving to meet its output target under an agreement between the Organization of Petroleum Exporting Countries and allies, including Russia, to limit production and support global oil prices. Baghdad is heavily reliant on oil revenues to support the country`s economy.

Iraqi Oil Minister Ihsan Abdul Jabbar said earlier in January that it will stay committed to OPEC decisions and compensate for its overproduction.

India on Tuesday complained that recent output cuts by some OPEC countries had created uncertainty for customers and led to a surge in global oil prices.

The changes in term supply volumes come as Iraq launched its new sour crude grade Basra Medium in January by splitting existing Basra Light crude production into two grades to improve the quality of its oil. SOMO also exports a third grade Basra Heavy.

The sources said SOMO cut term supplies to Indian Oil Corp, the country`s top refiner and its biggest Indian client, by 10% to about 350,000 barrels per day (bpd) for all three Basra crude grades, while the volume for Mangalore Refinery and Petrochemicals Ltd fell by 17% to 50,000 bpd.

SOMO is planning to cut the oil contract of Bharat Petroleum by about a quarter from last year`s 100,000 bpd, the sources said, adding that discussions with BPCL were still ongoing as the Indian company`s annual contract begins from April.

Hindustan Petroleum, which buys Basra Light oil, has asked SOMO to reduce its term supplies to about 50,000 bpd in 2021, down from about 80,000 bpd in 2020.

Iraq has agreed to HPCL`s request for lower supplies, while the companies are in talks about additional supply of Basra Medium grade, they said.

The annual oil contract for Reliance Industries, operator of the world`s largest refining complex, has also been changed. Reliance will get 33,000 bpd of Basra Medium grade instead of 66,000 bpd of Basra Light, the sources said.

The Indian refiners did not respond to Reuters` requests for comment.

The supply cuts to India followed a $2.5 billion oil prepayment deal between SOMO and Chinese state oil trader Zhenhua Oil Corp for 48 million barrels of Basra crude.

Iraq has reduced annual supplies of Basra crude oil to several Indian refiners by up to 20% for 2021, industry sources said, in a rare move by OPEC`s second-largest producer which is trying to meet its obligations under the group`s production deal.

Iraq has reduced annual supplies of Basra crude oil to several Indian refiners by up to 20% for 2021, industry sources said, in a rare move by OPEC`s second-largest producer which is trying to meet its obligations under the group`s production deal. Iraq was the top oil supplier to India in 2020 and a reduction in long-term Basra crude supplies could erode Baghdad`s market share in the world`s third largest oil importer and consumer. Iraq`s Oil Marketing Company (SOMO) has reduced the 2021 Basra term volumes to several Indian refiners by between 10% and 20%, the sources said. SOMO did not immediately respond to a Reuters request for comment. "We never expected Iraq to cut volumes. We may have to look for alternatives like tapping the spot markets," said a source at one of the Indian refiners. "This is happening at a time when we are preparing to increase run rates as fuel demand is recovering." SOMO told Indian refiners that it had reduced annual contracts for all Asian buyers to compensate for higher volumes produced in the previous year, one of the sources said. Iraq has been striving to meet its output target under an agreement between the Organization of Petroleum Exporting Countries and allies, including Russia, to limit production and support global oil prices. Baghdad is heavily reliant on oil revenues to support the country`s economy. Iraqi Oil Minister Ihsan Abdul Jabbar said earlier in January that it will stay committed to OPEC decisions and compensate for its overproduction. India on Tuesday complained that recent output cuts by some OPEC countries had created uncertainty for customers and led to a surge in global oil prices. The changes in term supply volumes come as Iraq launched its new sour crude grade Basra Medium in January by splitting existing Basra Light crude production into two grades to improve the quality of its oil. SOMO also exports a third grade Basra Heavy. The sources said SOMO cut term supplies to Indian Oil Corp, the country`s top refiner and its biggest Indian client, by 10% to about 350,000 barrels per day (bpd) for all three Basra crude grades, while the volume for Mangalore Refinery and Petrochemicals Ltd fell by 17% to 50,000 bpd. SOMO is planning to cut the oil contract of Bharat Petroleum by about a quarter from last year`s 100,000 bpd, the sources said, adding that discussions with BPCL were still ongoing as the Indian company`s annual contract begins from April. Hindustan Petroleum, which buys Basra Light oil, has asked SOMO to reduce its term supplies to about 50,000 bpd in 2021, down from about 80,000 bpd in 2020. Iraq has agreed to HPCL`s request for lower supplies, while the companies are in talks about additional supply of Basra Medium grade, they said. The annual oil contract for Reliance Industries, operator of the world`s largest refining complex, has also been changed. Reliance will get 33,000 bpd of Basra Medium grade instead of 66,000 bpd of Basra Light, the sources said. The Indian refiners did not respond to Reuters` requests for comment. The supply cuts to India followed a $2.5 billion oil prepayment deal between SOMO and Chinese state oil trader Zhenhua Oil Corp for 48 million barrels of Basra crude.

Iraq has cut crude oil supplies for most Indian refiners in 2021, report says

Oil prices rose on Wednesday after a reported sharp drop in US&nbsp;crude stocks and <a href="https://www.wionews.com/world/oil-rises-as-saudi-signals-opec-cuts-to-continue-under-new-minister-248572">OPEC</a>&nbsp;member Iraq said the producer group would discuss deepening output cuts amid ongoing demand concerns.

Brent crude gained 52 cents, or 0.8 per cent, to $62.90 a barrel by 1027 GMT, while US&nbsp;West Texas Intermediate rose 60 cents, or 1.1 per cent, to $58 a barrel.

Oil prices have risen more than 7 per cent this&nbsp;month, supported by declines in global inventories and signs of an easing in trade tensions between the United States and China, the world's two largest economies and energy consumers.

Prices rose this week after <a href="https://www.wionews.com/world/new-saudi-energy-minister-a-royal-with-decades-of-experience-in-opec-cuts-248719">Prince Abdulaziz bin Salman</a>, Saudi Arabia's new energy minister, said oil policy would not change and said an OPEC deal with Russia and other producers to cut output by 1.2 million barrels per day (BPD) would be maintained.

Iraqi Oil Minister Thamer Ghadhban said the Organization of the Petroleum Exporting Countries would discuss whether to deepen cuts when ministers meet on Thursday.

He said OPEC had discussed cuts of 1.6 million to 1.8 million BPD when considering output curbs last year.

Russia's Energy Minister Alexander Novak said an alliance of OPEC and other producers, known as OPEC+, would discuss global oil demand, but added that there were no fresh proposals to change production cut volumes.

<a href="https://www.wionews.com/business-economy/oil-hits-six-week-high-on-hopes-of-extended-opec-output-cuts-248741">OPEC cut</a> its forecast on Wednesday for growth in world oil demand in 2020 by 60,000 BPD to 1.08 million BPD, due to an economic slowdown.

It indicated the market would be in surplus.

The US Energy Information Administration (EIA) also slashed its demand forecasts this week.

Growing signs of a slowdown were flagged by oil traders and executives attending industry gatherings in Singapore and Abu Dhabi this week.

OPEC has pointed to rising global production next year, particularly in US shale fields, while data from the American Petroleum Institute (API) showed US&nbsp;crude stocks fell last week by 7.2 million barrels, more than twice the amount analysts in a Reuters poll had forecast.

"The API report is quite constructive for the oil market as it points to a tightening domestic oil market in the face of flat production and stronger demand," Dutch bank ING said.

The EIA's official numbers for US&nbsp;inventories will be released at 1430 GMT on Wednesday.

Oil prices rose on Wednesday after a reported sharp drop in US crude stocks and OPEC member Iraq said the producer group would discuss deepening output cuts amid ongoing demand concerns.

Oil prices rose on Wednesday after a reported sharp drop in US crude stocks and OPEC member Iraq said the producer group would discuss deepening output cuts amid ongoing demand concerns. Brent crude gained 52 cents, or 0.8 per cent, to $62.90 a barrel by 1027 GMT, while US West Texas Intermediate rose 60 cents, or 1.1 per cent, to $58 a barrel. Oil prices have risen more than 7 per cent this month, supported by declines in global inventories and signs of an easing in trade tensions between the United States and China, the world's two largest economies and energy consumers. Prices rose this week after Prince Abdulaziz bin Salman, Saudi Arabia's new energy minister, said oil policy would not change and said an OPEC deal with Russia and other producers to cut output by 1.2 million barrels per day (BPD) would be maintained. Iraqi Oil Minister Thamer Ghadhban said the Organization of the Petroleum Exporting Countries would discuss whether to deepen cuts when ministers meet on Thursday. He said OPEC had discussed cuts of 1.6 million to 1.8 million BPD when considering output curbs last year. Russia's Energy Minister Alexander Novak said an alliance of OPEC and other producers, known as OPEC+, would discuss global oil demand, but added that there were no fresh proposals to change production cut volumes. OPEC cut its forecast on Wednesday for growth in world oil demand in 2020 by 60,000 BPD to 1.08 million BPD, due to an economic slowdown. It indicated the market would be in surplus. The US Energy Information Administration (EIA) also slashed its demand forecasts this week. Growing signs of a slowdown were flagged by oil traders and executives attending industry gatherings in Singapore and Abu Dhabi this week. OPEC has pointed to rising global production next year, particularly in US shale fields, while data from the American Petroleum Institute (API) showed US crude stocks fell last week by 7.2 million barrels, more than twice the amount analysts in a Reuters poll had forecast. "The API report is quite constructive for the oil market as it points to a tightening domestic oil market in the face of flat production and stronger demand," Dutch bank ING said. The EIA's official numbers for US inventories will be released at 1430 GMT on Wednesday.

International oil prices gain after fall in US stocks

Iraq&rsquo;s oil ministry said today the Islamic State no longer controls any oil wells in Iraq.&nbsp;

The announcement comes a week after the militant group were ousted by&nbsp;government forces from an oil field near Kirkuk.

Since 1934, Kirkuk Field, has remained the most important part of northern Iraqi oil production.

After about seven decades of operation, Kirkuk still produces up to 1 million barrels per day (160,000 cubic metres per day).

On Thursday, IS were driven out of Shirqat by US-backed Iraqi forces.&nbsp;

Last month it lost the Qayyarah oilfield, south of Mosul, to government forces.

Deprived of oil income, IS will have to find other financing means such as increasing taxation and fines in areas still under its control, said Muthana Jbara, a provincial security official.

Iraqi forces have yet to recapture the Najma oilfield, near Qayyarah, but its producing wells are no longer accessible to IS because of the ongoing government offensive and air strikes, according to oil and security officials.

&quot;Najma has yet to be liberated because some sites are in the conflict zone. The reality is that it is extremely difficult to extract and smuggle oil while our forces are advancing towards Mosul...,&quot; oil ministry spokesman Asim Jihad said.

It will be very difficult to retake the largest city under IS control. Defense officials and intelligence analysts say IS has dug-in since it first seized Mosul in 2014.

(WION with inputs from Reuters)

Islamic State militants were driven out of Shirqat on Thursday by US-backed Iraqi forces

Iraq’s oil ministry said today the Islamic State no longer controls any oil wells in Iraq. The announcement comes a week after the militant group were ousted by government forces from an oil field near Kirkuk. Since 1934, Kirkuk Field, has remained the most important part of northern Iraqi oil production. After about seven decades of operation, Kirkuk still produces up to 1 million barrels per day (160,000 cubic metres per day). On Thursday, IS were driven out of Shirqat by US-backed Iraqi forces. Last month it lost the Qayyarah oilfield, south of Mosul, to government forces. Deprived of oil income, IS will have to find other financing means such as increasing taxation and fines in areas still under its control, said Muthana Jbara, a provincial security official. Iraqi forces have yet to recapture the Najma oilfield, near Qayyarah, but its producing wells are no longer accessible to IS because of the ongoing government offensive and air strikes, according to oil and security officials. "Najma has yet to be liberated because some sites are in the conflict zone. The reality is that it is extremely difficult to extract and smuggle oil while our forces are advancing towards Mosul...," oil ministry spokesman Asim Jihad said. It will be very difficult to retake the largest city under IS control. Defense officials and intelligence analysts say IS has dug-in since it first seized Mosul in 2014. (WION with inputs from Reuters)

IS loses control of last oil wells in Iraq: Oil Ministry