Iraq’s oil exports reversed course in January, falling 13.8% m/m to 78.6mn barrels, swinging from a 21% monthly hike a month earlier, as output from both Basra and Kirkuk dropped, SOMO official data showed. The high prior-month base played a role as output and exports have normalized following a period of disruption.

Oil exports from the Kirkuk regions had stopped in May last year amid the security turmoil related to the al-Qaeda-linked Islamic State in Iraq and Greater Syria (ISIS). But the resuming of operation in the Kurdish-controlled region and the central government’s transfer of funds due to the semi-autonomous Kurdish government will help boost the much needed oil revenue in 2015.

Declining oil prices on the international markets cut Iraq’s value-added oil proceeds by 37% m/m to $3.258bn in January. The average oil price per barrel fell to $41.45 a barrel in January from $56.5 a barrel a month earlier.

Exports from the southern Basra region dropped 13.4% m/m to 74.1mn barrels in January while those from Kirkuk fell 19.7% m/m to 4.5mn barrels.

Iraq's parliament recently endorsed the revised 2015 state budget envisaging IQD119tn ($105bn) in spending and IQD25tn deficit on much lower crude oil windfall, which generates nearly 95% of budget income. The initial budget draft had assumed $70 a barrel oil price. But the recent sharp fall in crude prices pushed the government to revise the overall budget, now assuming a $56 per barrel crude price. Despite the revision, several Iraqi economist and lawmakers are pessimistic on the oil price outlook as current prices hover around $49 per barrel.

The good news, however, is that the central government reached an agreement with semi-autonomous Kurdish government on oil sharing and production. The 2015 budget implies a financial arrangement between Baghdad and the Kurdish region, allowing the Kurds to export 300,000 barrels per day of oil from Kirkuk and 250,000 bpd from their own fields in exchange for a 17% share of the national budget.