The Zhitong Finance App learned that, according to people familiar with the matter, Iraq is seeking to drastically increase its crude oil production quota while OPEC and its allies evaluate the production capacity of member countries. The purpose of this review is to provide a basis for countries to set production targets for next year.
As the second-largest oil producer within the OPEC+ framework, Iraq hopes that future production targets will be calculated using 6 million barrels per day as a baseline. This level is a significant increase from its current quota. Since the discussion is an internal matter, people familiar with the matter requested anonymity. Iraq's Ministry of Petroleum did not respond to requests for comment.
Iraq — the country that saw the birth of OPEC 60 years ago — hinted in June of this year that it would not rule out the possibility of withdrawing from the organization if it was unable to obtain a sufficiently high benchmark quota. The move could be a major blow to the OPEC+ alliance, which was previously shaken by the withdrawal of another important Middle Eastern member, the UAE.
Currently, OPEC and its partners have commissioned an external consulting agency to assess the actual maximum production capacity of each member country to bring the quota closer to reality. The assessment is expected to be completed by the end of this month and will be approved at the oil ministers meeting in late November.
The results of this assessment are critical to the balance between supply and demand in the global oil market — if Persian Gulf crude oil exports, which were interrupted due to the war in Iran, return to normal, the market may once again face oversupply pressure — and also has a significant impact on large energy companies such as Chevron (CVX.US) and ExxonMobil (XOM.US) that are negotiating a return to Iraq.
This result is also far-reaching for unity within OPEC. Meanwhile, Venezuela, another founding member, is facing a crossroads — as the country reached a watershed agreement with US President Donald Trump, the US was able to exert considerable control over some of its oil reserves, and Venezuela is seriously evaluating whether to leave the organization.
Iraqi officials have previously clearly expressed their country's ambitions. In May of this year, Oil Minister Bashim Mohammed Al-Khudair said that Iraq is in discussions with OPEC to increase production to 5 million barrels per day after the end of the Iranian conflict; Prime Minister Ali Al-Zaidi announced this month that the country's goal is to increase production to about 10 million barrels per day by 2030.
However, there is still a high degree of uncertainty as to whether the 6 million barrels per day benchmark will be approved.
According to current arrangements, Iraq's production limit for September and October under the OPEC+ framework is 4.431 million barrels per day. The Paris-based International Energy Agency estimates that Iraq's total sustainable production capacity is about 4.9 million barrels per day.
However, due to the blockage of crude oil transportation in the Strait of Hormuz due to the Iranian conflict, Iraq's actual production is currently far below the above level. According to compiled data, the country's average daily production in August was only 2.98 million barrels.