Newsletter – March 2021

Al Majal Human Resources (AMHR) has been awarded ISO 9001:2015 certification, for quality management system (QMS). The certificate is valid for the scopes of provision of Recruitment, Payroll, Manpower and Human Resources Management Services.

Al Majal continues its participation as a silver sponsor of Iraq Business Forum’s (IBF) latest online event, which took place on March 2nd. Al Majal is a regular sponsor of IBF, the premier, exclusive business event in Dubai for companies and international investors in Iraq.

Al Majal Logistics Services’ 3PL service offering includes supporting e-commerce companies present locally or internationally that are looking to gain access to the Iraqi market.

Daily coronavirus cases in Iraq have spiked to an all-time high of 6,051 since the first case was reported in the country in February last year, beating the previous peak of 5,505 daily cases in September. Active cases, which had fallen to a 9-month low of 14,000 in early February are now at 68,000, while vaccination rollouts remain slow and patchy. The main reason for the sudden spike is the removal of the travel blacklist on 21 international locations which had been implemented to prevent the new strain of the coronavirus from entering Iraqi territory. Daily deaths, though under 50, continue rising, even though overall recovery remains near 90%. Iraq began its vaccination rollout in early March, with first batches of the Pfizer-BioNTech, Oxford-AstraZeneca, and Sinopharm vaccines arriving in the country. Even though rollout has been slow, news of purchasing 1.6 million doses of Pfizer-BioNTech and 8 million of Oxford-AstraZeneca has bolstered confidence somewhat.

Economic revival hinges on the country’s energy sector, where several high-profile developments have taken place in recent weeks, with oil exports in February increasing by 4%, enabling Iraq to reach a 1-year high in monthly oil revenues. The 2021 Budget, first presented in December, was finally approved on March 31, preserving the country’s recent currency devaluation (~23% to the US dollar), and projecting a spending budget of US$ 89.7 B and a dinar-denominated deficit of US$ 19.5 B. Iraq expects to earn oil revenues of US$ 47.5 B[1] based on an oil price of US$ 45/b and ~3.5 Mb/d of exports, which, in dinars, should significantly improve state earnings. This has caused Fitch Ratings to revise the Outlook on Iraq’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Stable from Negative and affirmed the IDR at ‘B-‘. 3.5 Mb/d is a significant jump from Iraq’s current ~3 Mb/d exports, which it is hoping to realize from new production coming online from state-run fields that have had to keep production shuttered-in due to OPEC+ constraints.

A roundup of the latest developments in the Iraqi energy markets is summarized in the table below.

Global demand has exceeded slightly expected volumes in Q1 2021, supported by cold weather in northern Asia, Europe, and the US, as well as stronger economic indicators on the back of successful vaccine deployment in major geographies. Some bearishness however continues to surround the full return of road and transportation fuel demand in OECD Europe, due to the on and off lockdowns to battle new coronavirus strains, but is expected to spike as the summer holiday season approaches later in the year. Non-OECD demand will continue improving due to positive momentum from Q4 2020 carrying forward in China, and also India, where industrial activity indicators have witnessed an uptick.

In the Middle East, overall demand increased by 10% in January 2021 from November-December 2020 levels, even though consumption in Q4 2020 had fallen slightly, compared to Q3 levels of 7.9 Mb/d. The ongoing tourist season in major MENA economies (UAE, Kuwait, Saudi Arabia), and robust vaccination drives have contributed to the rise in demand. PMIs have stabilized, even though economic activity remains slow, reflected in lower diesel consumption. This has informed some noteworthy deals in the energy sector in recent weeks, summarized in the following table.

Top Energy Deals in the Region

Iraq’s Ministry of Oil has announced initial oil exports for February of 82.9 million, giving an average for the month of 2.96 million barrels per day (bpd), up from the 2.87 million bpd exported in January.

Petrofac’s Engineering & Production Services division announced a one-year extension to its contract with Basra Oil Company (BOC) for Iraq’s main export terminal infrastructure.

Iraq began Covid-19 (coronavirus) vaccinations in March, immediately following receipt of its first shipment of vaccines from China’s Sinopharm. According to a government statement, the first to be vaccinated are healthcare workers.

The Iraqi government has launched what it describes as “an exceptional program” to lift the requirement to obtain entry visas prior to arrival in Iraq.