Asia receives the lion's share of Iraqi crude exports, accounting for nearly 60 percent of exports last year. Europe has been the second leading destination, accounting for nearly 20 percent of barrels, while flows to North America dropped last year to 14 percent.
These three regions accounted for slightly less than 90 percent of all Iraqi deliveries last year.
Iraq’s oil ministry said in November that Asian markets would get nearly 70 percent of total crude exports in 2019. This isn't playing out in the data just yet, but there are, however, pockets of strength.
India is the leading recipient of Iraqi crude and is taking advantage of a supply void left by Iran amid sanctions to ratchet up flows. South Korean offtake is also up significantly this year versus 2018 figures. While flows to China are down slightly, it is still comfortably the second leading destination for Iraqi oil.
Exports into Europe are also considerably stronger so far in 2019, although this may well be related to higher exports out of northern Iraq, as well as trying to steal Iran's lunch. As Iranian barrels have dropped off to southern Europe, Iraqi deliveries this year have increased for Greece, Italy and Spain. In terms of northwest Europe, flows to Netherlands have also leaped higher.
After peaking above 800,000 bpd last April, Iraqi flows to the US, meanwhile, have dropped considerably, with the Persian Gulf country favoring Asia instead. Iraq boosted deliveries to Asia by more than 10 percent last year. But this could change with recent sanctions applied on Venezuela.
A potential supply void of as much as 500,000 bpd of Venezuelan crude could see renewed interest in Iraqi crude, and particularly Basrah Heavy. Iraqi imports in January reached a four-month high of nearly half a million barrels per day - but Basrah Heavy accounted for less than 20 percent of this volume. Based on our projections, Iraqi crude is not going to fill the potential gap left by Venezuela - it is focused on filling the void left by Iran instead.