Baghdad – Despite the Iraqi government’s denial of any intention to withdraw from the Organization of the Petroleum Exporting Countries (OPEC), the controversy sparked by reports discussing this possibility has opened a wide debate regarding the future of Baghdad’s relationship with the organization. This comes in light of Iraq’s efforts to increase its production quota to meet its growing financial needs. While observers believe that hinting at a withdrawal is nothing more than a negotiating card to pressure for raising the production ceiling, others warn that any step of this kind could affect Iraq’s standing within the organization and the balances of the global oil market.
The controversy arose following a Reuters report quoting informed sources stating that Iraq might consider all options if it does not receive a significant increase in its production quota, including exploring the possibility of withdrawing from OPEC. However, the Iraqi government quickly denied this narrative, reaffirming its commitment to its membership in the organization, while continuing its demands to review production ceilings in line with its production capacities and economic circumstances.
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The Ministry of Labor spokesperson, Salim Al-Rikabi, told Al Jazeera Net that the ministry’s statement was clear in denying what was raised regarding Iraq’s withdrawal from OPEC, confirming that the government has not put forward this option.
He explained that Iraq’s request to reconsider production ceilings is intended to align with its production capabilities, taking into account what the Iraqi oil industry has endured over past decades from wars, destruction, and blockades. He added that Iraq seeks an equitable production level that allows it to reclaim its position as the second-largest producer within the organization, noting that any required increase in the production ceiling is still under review and discussion within OPEC.
(Al-Fayhaa field, the ninth exploration block in Basra near the Iraqi-Iranian border – Al Jazeera)
Confused Rhetoric
Oil expert Assem Jihad believes that the debate surrounding this file revealed a state of confusion in the official oil discourse, emphasizing that demanding a quota increase is a legitimate right for Iraq, but the manner in which it is presented is just as important as its content.
Jihad added to Al Jazeera Net that while Iraq has a legitimate right to demand an increase in its production quota, presenting this demand with threatening language or through contradictory statements—as he described it—does not align with Iraq’s status as a founding country and the second-largest producer in the organization, which could create sensitivities with other producing nations.
He pointed out that the real challenge is not limited to the quota itself, but also includes managing export bottlenecks, upgrading export terminals and pipelines, and adopting smart oil diplomacy that strengthens Iraq’s negotiating position without entering into a confrontation with OPEC.
Jihad explained that raising the production quota will not yield the desired benefit unless it coincides with addressing export infrastructure challenges, through an agreement with Turkey, rehabilitating the pipeline network, and diversifying export outlets.
(Umm Qasr Northern Port in Iraq’s Basra Governorate – Al Jazeera)
Why is Iraq Demanding a Quota Increase?
Specialists confirm that Baghdad bases its demand to raise its production ceiling on technical and economic justifications related to its increased production capacity and its need for additional financial resources, as well as the upcoming review of quotas within the “OPEC+” alliance.
In this context, the head of the Iraq Energy Center, Furat Al-Mousawi, told Al Jazeera Net that Iraq’s request to raise its production quota in OPEC was driven by financial pressures resulting from declining exports due to the closure of the Strait of Hormuz. It is also driven by its push to establish its reference production capacity within the upcoming technical review of the 2027 quotas in the OPEC+ alliance, while also capitalizing on the changes the organization witnessed following the UAE’s withdrawal about two months ago, which gave Baghdad wider maneuvering room.
Al-Mousawi explained that Baghdad believes its current quota, which stands at 4.378 million barrels per day for July, is proportionate neither to its oil reserves nor to the needs of a country whose population exceeds 46 million.
He noted that in the short term, Iraq is demanding a gradual increase ranging between 150,000 and 300,000 barrels per day, while its strategic vision aims to raise its sustainable production capacity to around 7 million barrels per day over the coming years.
Gains and Risks
Although a withdrawal might offer Iraq greater flexibility in managing its production and concluding bilateral agreements according to experts, they warn that such a step could have significant repercussions on the oil market and on Iraq’s standing within the organization.
In this regard, oil and energy affairs expert Adel Sadiq told Al Jazeera Net that Iraq’s withdrawal from OPEC involves both gains and risks. On one hand, it allows freedom from production ceilings and opens the door to concluding bilateral agreements, including a proposed joint energy and development fund project with the United States that relies on allocating around 500,000 barrels per day.
However, he warned that the move could lead to an increase in oil supply, pointing out that since Iraq is the second-largest producer in the organization with an output of about 4.3 million barrels per day and a founding state, its exit could leave major repercussions on the future of OPEC.
Sadiq added that the most appropriate option for Baghdad, if the organization does not respond to its demands, is to continue negotiating within the OPEC+ alliance, expecting Iraq to obtain an increase of about 26,000 barrels per day during the next meeting. He also noted that suspending membership could represent a middle-ground option, similar to what Indonesia did previously, pointing out that Iraq has activated fuel oil exports via the Syrian port of Baniyas, with expectations that exports will exceed 600,000 barrels in the coming period.
Data from the oil sector indicates that OPEC countries produce around 40% of global oil supplies and possess nearly 80% of proven reserves. These percentages rise to about 55% of supplies and 90% of reserves when including countries from the OPEC+ alliance, giving the alliance massive weight in steering global oil markets and influencing price levels.
Source: Al Jazeera
