Bloomberg: Iraq Watering Out Cause of Prod. Decline

“The uptrend looks set to continue,” said Aaron Kildow, a broker at Prudential Financial Derivatives LLC in New York. “The news that Iraqi production is falling because of rising water levels is unwelcome. It’s just one more supply-related worry that the market doesn’t need right now.”

Iraq, the Middle East’s fifth-largest oil producer, faces a drop in oil output because of rising water levels in its deposits, an Iraqi oil ministry official said.

“We hope to get equipment this year that will lower the level of water in our fields,” Hazim Sultan, director general of reservoirs and field development at Iraq’s oil ministry, said in a telephone interview from Baghdad today.

Iraq, site of the world’s third-largest oil reserves, has struggled since the U.S.-led invasion of 2003 to return oil production to pre-war levels. Oil output fell for a second month in May, dropping to 1.8 million barrels a day as attacks on its pipelines doubled. The Persian Gulf nation pumped as much as 2.48 million barrels a day in February 2003, before the invasion.

Bloomberg