Iraq passes 2017 budget

The Iraqi parliament has approved a USD 85 billion budget for 2017, lawmakers said on Wednesday. It assumes an oil prices of USD 42 per barrel.

On Thursday, WTI was going for USD 49.76 per barrel, while Brent traded at USD 53 per barrel. The budget of the world’s fourth-largest oil producer has steadily shrunk in recent years, decreasing from USD 105 billion in 2015 and USD 88.2 billion in 2016. Those budgets were based on a price USD 56 and USD 45 per barrel, respectively.

For 2017, the budget envisions exports of 3.75 million bopd, which includes 250,000 bopd from fields in the Kurdistan Regional Government-controlled area. Parliament also signed off on fiscal transfers to the Kurdistan Region, agreeing to pay out a 17% share of the federal budget. If upheld, it could set the stage for an official revenue-sharing agreement.

An initial deal to that end was reached in December 2014, but budget constraints and and disagreements soon derailed it. A new arrangement has been in place since last summer, whereby half of the oil produced by the federal North Oil Company in Kirkuk is retained by the Kurdistan Regional Government, while the other half to transferred to Iraq’s Oil Marketing Company.

Yet the passing of the 2017 budget was met with disapproval from the Kurdistan Democratic Party, the dominant force in Kurdish politics. “Passing the budget today has not resolved the disputed issues between the central government and the Kurdish region, including oil exports,” the head of the party’s bloc in parliament, Ahmed Muhsin al-Sadoun, said.