Fri. AM-PM TNT News Articles from Iraq 8-30-24 (2024)

TNT

Iraq’s oil and gas sector is the country’s lifeblood, contributing more than 95% of GDP.

And to Basra, where its crude oil is witnessing weekly losses of $5, or 2%, as a result of the global decline in oil prices, while observers see: “The interesting thing about the latest confusing matter is the acceleration of oil prices, which have witnessed some declines, but as long as oil prices are above (70) dollars, Iraq is safe and the planned deficit is (47) billion dollars, but they confirmed that if it falls below (70) dollars, even by one dollar, this will increase the deficit by a large percentage of up to $1.2 billion if the decline continues for one year, and this will put great pressure on the budget.

The data also indicates that prices will remain at $70 and will rise again to around $80 based on the OPEC and OPEC Plus action plan, and Iraq will benefit. As for Iraq’s current weekly losses, they are due to fluctuations or declines in Asian demand, especially in India and China.

Strategic expert Alaa Al-Azzawi said: “This measure will enhance the value of the local currency, which is suffering from confusion due to the fluctuation of the dollar exchange rate in the Iraqi markets.

Al-Azzawi told the “Iraq Observer” agency that the most important thing in this procedure is selling oil in dinars. “The petro-dinar will enable the Iraqi currency to enter the global markets, as Russia did before and sold its oil in local currency.”

The strategic expert pointed out that the most important thing is that the Iraqi dinar will enter a new phase in global trade relations, and the position of the dollar may weaken within Iraq.

It recorded weekly losses of $3.25, while Basra Medium crude closed in its last session with an increase of $1.8 to reach $75.47, and it also recorded weekly losses of $3.39, or the equivalent of 3.92%, while Brent crude recorded weekly losses of 1.2%, and West Texas Intermediate crude recorded weekly losses of 2.1%.

Both crudes hit their lowest levels since early January this week, after the U.S. government sharply cut its estimate of jobs added by employers in the country this year through next March.

For his part, Al-Sudani’s financial advisor, Mazhar Muhammad Salih, said: “Any deviation between oil prices (petrodollars) and the exchange rate (petrodinars) according to international market data will be considered a cost that requires compensation by paying fewer dinars or collecting a higher dinar in the opposite case,” indicating that “international reserve currencies are foreign currencies held by central banks and global financial institutions as part of their monetary reserves.”

These currencies are used in international transactions and debt settlement between countries, and are a standard for international payments and facilitating global trade.”

“Russia suffered a lot when it priced its exported oil in rubles (petrorubles), and the ruble is a non-reserve currency, and committed to a value for the ruble that was initially denominated in gold to ensure the stability of oil revenues. Here, the petroruble underwent two asset cycles at the same time (which complicated the scene of selling oil in local currency and stabilizing the value of the petroruble),” Saleh said.

According to Saleh, international market data indicate that “the first cycle: is the result of the impact of what is called the gold asset cycle and its impact on the value of the (petroruble) or the local currency denominated in exported oil.

The second, and the talk is in favor of: it is the oil assets cycle, and its effect on the value of a barrel of oil outside the global price and the reflection of that on oil revenues priced in that currency, and that “the two cycles are asset cycles that are linked and contradict each other at the same time on the value (of the currency priced in the exported oil, such as the petroruble), which made pricing Russian oil in rubles as a local currency and according to the data of the global oil market a very complex issue.”

He pointed out that “the principle of using the dinar as a local currency in international oil exchanges (petrodinar) is not without many challenges, which is why those potential challenges must be carefully considered, especially the issue of the flexibility or stability of the value of the (petrodinar) itself to change and fluctuation, especially since we in the oil market are not price makers in it, but rather price takers.”

He noted that “the global oil market will control the fluctuation of the local currency (petrodinar), in addition to the importance of international recognition of it, and the financial infrastructure necessary to support such operations from (petrodinar).

“In other words, the strategy of basing the value of the currency on oil exports directly may make the value of the local currency vulnerable to fluctuations in the global market,” he continued. “The proposal to sell oil in dinars as a local currency must take into account an important theory in global trade called the Law of One Price, which is an economic concept that assumes that the same commodity should be sold at the same prices in all markets when the price is expressed in the same currency.”

Explaining: “This is on condition that there are no transportation costs or trade barriers such as customs tariffs and others, as the single price theory here is the basis for many economic and commercial models and the theory is based on the assumption that markets operate efficiently, according to the official agency.”

Brent crude futures fell 1.6 percent, or $1.31, to $80.12 a barrel, while U.S. West Texas Intermediate crude fell 1.7 percent, or $1.30, to $76.12.

Prices have risen sharply in the past few days as analysts point to a potential shutdown of Libya’s Nagat fields, which could limit the OPEC member’s output of around 1.2 million barrels per day.

Analysts pointed to tensions in the Middle East following a large-scale exchange of fire between I****l and Iran-allied Hezbollah in Lebanon in recent days, according to Reuters.

Crude oil prices have recently been affected by growing expectations that the Federal Reserve will cut interest rates next month, which could boost economic growth and thus demand for oil.

U.S. data is expected to show that energy companies last week pulled crude oil from inventories for the eighth week out of nine.

Analysts expected US energy companies to withdraw about three million barrels of crude from inventories during the week ending August 23.

The American Petroleum Institute is scheduled to release weekly U.S. oil inventory data today, as is the U.S. Energy Information Administration. link

According to a statement by the Prime Minister’s Office, a copy of which was received by {Euphrates News}, the meeting addressed “issues related to the oil market, with what the region is witnessing, which represents the main source of oil to the world, and the importance of coordinating joint efforts between all member states of the organization, in a way that maintains the sustainability and stability of oil prices, and does not harm exporters and consumers.”

The Prime Minister stressed that “Iraq, as one of the largest oil exporting countries in the organization, always declares its commitment to the general policies of the plans adopted by OPEC countries regarding production, or what is determined within the framework of the OPEC Plus agreement.”link

Al-Tamimi said in an interview with Baghdad Today, “The World Bank is an international banking financial institution affiliated with the United Nations, but it is subject to special management related to the influence of some countries according to their banking contributions, as its tasks are limited to investment financing for countries, providing international loans, and managing projects according to its international banking conditions.”

He pointed out that “Iraq is currently working extensively with one of the World Bank institutions with the International Finance Corporation (IFC) to develop a group of sectors, including the transportation and airports sectors,” explaining that “the World Bank, as an important international and financial institution and a UN institution at the same time, works with Iraq and other countries in the fields of lending and providing technical consultations, as well as providing Iraq with economic data and analyses within the limits of its work.”

The expert in economic and financial affairs stressed that “it is not within the World Bank’s jurisdiction to intervene in the issues facing Iraq, especially with regard to the remittance crisis, local banking failures, or weak procedures to protect funds from suspicions of money laundering and financing t*******m.”

According to specialists, Iraq has more than (70) banks, approximately five of which are governmental and the remaining number are private banks, but Iraq relies heavily on financial transfers, especially with regard to the dollar, to various foreign banks, due to the failure of Iraqi private banks to arrange their legal and technical situations in the issue of financial correspondence.

Earlier, Alia Nassif, a member of the Parliamentary Integrity Committee, revealed that the Iraqi-Jordanian National Bank had obtained $3.6 billion from the currency auction during the first three months of the current year, which enabled it to obtain a profit of about 40 billion dinars. link

Source: Dinar Recaps

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The plan comes just as Libyan oil production drops due to a. political conflict in between various factions.

The declines will tighten the oil market ahead of a prepared. output boost by OPEC and its allies – called OPEC+ – from. October to begin loosening up some production cuts.

Iraq produced about 4.25 million barrels each day (bpd) in. July, according to the Company of the Petroleum Exporting. Countries, mentioning secondary sources. That is above its quota of. 4 million bpd.

The oil ministry had actually sent a strategy to OPEC to compensate. for the overproduction between this month and September next. year. Iraq’s cumulative overproduction between January and July. was 1.4 million bpd, OPEC said recently.

Iraq cancelled a spot cargo of 1 million barrels in August. to reduce its exports throughout the month, the source said.

There were quotes for the freight however it was removed the. market, the source said, adding two more freights of the exact same. size will be deferred from August to September.

Baghdad plans to reduce its output from September onwards by. cutting exports to 3.3 million bpd or lower, from 3.43 million. bpd, in addition to cutting local consumption to 500,000 bpd from. 570,000 bpd and asking the Kurdistan Regional Federal government to cut. its output to 50,000 bpd from 150,000 bpd, the source stated.

OPEC Secretary General Haitham Al Ghais was in Baghdad on. Wednesday and consulted with Iraqi Oil Minister Hayan Abdel-Ghani.

OPEC stated on X that Abdel-Ghani restated Iraq’s. dedication to the complete and timely implementation of production. level changes, including payment plan as agreed under. the Statement of Cooperation link

Council member Nora Al-Jahishi told Baghdad Today, “Despite its short life, the Baghdad Council has worked during the past period to activate the oversight aspect and follow up on the work of service departments in Baghdad, and there is a noticeable development in service work due to continuous and strict oversight and follow-up.”

Al-Jahishi added, “The Baghdad Council has developed an important and strategic work plan to launch projects and complete others that have been stalled for a long time, but we are waiting for the financial allocations, as they have not been released to us yet by the central government.”

The Iraqi capital, Baghdad, is witnessing a remarkable urban development on the level of main roads and vertical buildings after the relative security in the country was restored and the country opened up to investments and partnerships with Arab and Western countries.

Last year, the Ministry of Planning revealed a decrease in the number of stalled projects in Iraq, while indicating that there are more than 7,000 projects under construction.

The spokesman for the Ministry of Planning, Abdul Zahra Al-Hindawi, told Baghdad Today, “There are more than 7,000 projects in Iraq with different rates of completion, and great efforts are being made to complete them within two years,” noting that “the government has raised the slogan of services and interest in service projects such as school projects, hospitals, roads, and sewage networks.”

He added that “the number of stalled projects has decreased to 1,000 projects distributed across various sectors and governorates,” noting that “the Prime Minister has directed that these projects be resolved during the coming and upcoming year.”

He added, “We have 73 hospitals that are lagging behind and with different rates of completion that were addressed through the Amiri order 45, and some of the suspended hospitals were completed, and about 90 percent will be completed within two years,” indicating that “there are 16 new hospitals that have been included in the 2024 budget.”

Regarding the schools sector, Al-Hindawi explained that “there is a great deal of work being done to complete this sector, as the project of the thousand Chinese schools has begun, and the construction of a number of schools will be financed within the Iraq Development Fund,” noting that “nearly 40 percent of the delayed or suspended schools have been completed.”

The spokesman for the Ministry of Planning, Abdul Zahra Al-Hindawi, had previously explained to Baghdad Today the reason for the halt of most projects in Iraq, indicating that “the main reason for the halt of these projects is due to Resolution 347 issued in 2015, during the financial crisis, which led to the halt of many projects, and these projects are distributed across various sectors of transportation, communications, buildings, services, industry and agriculture, and they are at different rates of completion.”

He added, “The priority now within the current government’s program is to complete service projects, most notably hospital projects, school projects, sewage projects, and water projects. By the end of next year 2024, more than 90% of these projects will be completed, especially after the approval of the budget law, and with the existence of financial allocations for the investment program link

Source: Dinar Recaps