Iraq exports most crude oil to U.S.

Oil prices dropped by more than 3% yesterday. Brent fell to a 2½-month low of $45.6 per barrel as supply increased while WTI only just held its own above its end of October low of $42.6 per barrel. The renewed price weakness increases the pressure on OPEC producers, first and foremost Saudi Arabia. During a meeting in the Saudi Arabian capital Riyadh, Ecuador demanded a cut in OPEC production. 

The next OPEC meeting is expected in three weeks' time. Representatives of Saudi Arabia and Kuwait statement do not lead one to expect any change to the current OPEC strategy, which aims to defend market shares even if this means putting up with low prices. 

Iraq's recent behavior did not indicate that it has lowered its December selling prices for European consumers, thereby following Saudi Arabia's lead. According to Bloomberg and Reuters, Iraq's shipments of crude oil to the US will total just shy of 20 million barrels in November, the highest volume in more than three years. A further swell in US crude oil stocks is anticipated, which are likely to have risen significantly last week, says Commerzbank. Two days ago, an inventory build of 6.3 million barrels, reported API. 

The US Department of Energy will be publishing the official inventory data this afternoon. These will also include the latest figures for US oil production, which increased slightly in the last two weeks, giving rise to disappointment and weighing on prices. Any renewed increase in production would add to the pressure on oil prices.