Iran OK With $25 Oil As Iraq Pumps Crude At Record Pace

The precarious “game theory” equilibrium that worked for decades while OPEC was still a functioning cartel is unwinding before everyone’s eyes. Just as Saudi Arabia accurately anticipated, the lower the price of crude goes, the more both OPEC members and their non-OPEC peers (especially shale companies funded by hundreds of billion in junk bonds) will have to produce in order to keep their budgeted revenues roughly in line (and keep creditors happy for the time being) in the process setting off an unprecedented wave of bankruptcies and production capacity declines, which take about 6-12 months after the price plunge to materialize. Case in point: the country formerly known as Iraq (and now better known as that region around the Tigris and the Euphrates that does not belong to ISIS) is pumping crude at a record pace and will continue to boost exports this year, its Oil Minister Adel Abdul Mahdi said.
Those who were rushing to buy Brent on its latest intraday Friday spike, and are wondering why it is back below $50, here is the reason: “The average for Iraqi crude output is 4 million barrels a day, which is a historical record,’ Abdul Mahdi said at a news conference after meeting his Turkish counterpart, Taner Yildiz, in Baghdad. Exports from Iraq will rise to 3.3 million barrels a day this year, boosted by oil from the Kurdish region, Abdul Mahdi said.
Bloomberg reminds us that Iraq’s central government reached an accord last month with the Kurds to allow increased oil exports through Turkey. Oil prices have fallen about 56 percent since June amid a supply surplus on global markets. That, and also unknown numbers of ISIS crude barrells being transported via illegal channels through Turkey and onward to unknown end-buyers, most of which operated shrouded in secrecy.

This post was published at Zero Hedge on 01/19/2015 –.