Iraq's oil revenue plunges despite soaring crude exports

Iraq’s oil revenue has fallen by more than USD 650 million due to plummeting crude prices in global markets although the country’s oil exports have been rising.

According to a statement by the country’s Oil Ministry on Monday, the fall in revenue came in spite of the fact that Iraq’s crude exports rose in January compared to a month before, AFP reported.

At present, the government in Iraq is facing a financial crisis due to the drastic fall in oil prices. According to the Iraqi Oil Ministry, the country’s oil was sold at an average USD 22.21 per barrel in January, which was less than half the amount projected in the 2016 budget.

Iraq exported an average of 3.28 million barrels per day of crude oil in January, showing an increase compared to 3.21 million barrels per day in December, but Baghdad’s monthly revenue fell from USD 2.92 billion to USD 2.26 billion, the Oil Ministry’s statement added.

The decrease in revenue has been attributed to a fall in oil prices, which averaged around USD 29 per barrel in December.

Neither month included oil exports from northern Iraq through the Turkish port city of Ceyhan, the ministry added, because the Iraqi Kurdistan Region has been independently exporting oil from four northern provinces after an agreement between the region and the central government collapsed last year.

Iraq’s Finance Minister Hoshyar Zebari has warned that 2016 "will be a difficult and harsh year" for Iraq, and that "projections indicate a continued collapse of oil prices."

Experts believe that Iraq can ill afford the continued drop in oil revenue, on which the government relies for the vast majority of its funds, at a time that it is fighting a costly war against Daesh (ISIL) terrorist group, which overran large swathes of the Iraqi territory in 2014.

Millions of Iraqis have been displaced by violence and hundreds of thousands more are expected to flee fighting in 2016, while areas that are retaken from the terrorists are often in a state of total devastation as a result of the fighting and will cost a huge amount to rebuild.

On Sunday, the United Nations appealed for USD 861 million in humanitarian aid for Iraq to help bridge an estimated gap of USD 891 million between the country’s planned expenditures on relief operations and available government funds.

"The government has its back against the wall because the price of oil is so low, and that's why we're asking the international community to be generous," said Lise Grande, the UN humanitarian coordinator for the country.

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