Middle East crude climbs amid talks of Iraq allocation cuts

New York — Dubai crude futures were higher mid-morning on June 16 as talks emerged of allocation cuts for Asian buyers of Iraqi oil in July following reports that the Middle Eastern crude producer will sharply cut back on oil exports in June.

At 11 am in Singapore on June 16 (0300 GMT), the August Dubai futures was pegged at $39.13/b, up 4% from the 4.30 pm Singapore close (0830 GMT) on June 15, S&P Global Platts data showed.

"SOMO allocation cut [for July loading] is a little more than last month [June loading]," said a North Asian crude trader.

Iraq expects to export 2.8 million b/d of crude oil in June, down from 3.63 million b/d in May, as it seeks to firmly commit to the OPEC+ cuts after it failed to comply with its quota in May, according to the country's oil minister Ihsan Ismaael.

"It is in our interest to commit as OPEC's second largest producer," Ismaael told al-Sharqiya TV on June 14.

Dubai futures were higher even as the Brent/Dubai Exchange Futures for Swaps spread widened to 67 cents/b in the morning of June 16, up 17 cents/b from the Asian close on June 15.

Meanwhile, the July/August Dubai crude futures spread was pegged at minus 2 cents/b at 0300 GMT June 16, down from the 3 cents/b premium assessed at Asian close on June 15.

The August/September spread also fell to minus 27 cents/b in the morning of June 16, down from minus 24 cents/b assessed at the Asian close on June 15.