Iraq pushes for 6 million bpd baseline in OPEC+ capacity review

LONDON – Iraq is pressing OPEC+ for a substantial increase in its oil production quota, seeking to have future output targets calculated from a baseline of 6 million barrels per day as the group reviews how much each member can sustainably produce, Bloomberg News reported on Wednesday.

People familiar with the discussions said the proposal would represent a major increase from Iraq’s current production limits. They asked not to be identified because the capacity review is being conducted privately. Iraq’s oil ministry did not immediately respond to a request for comment.

The review is intended to establish new baselines for OPEC+ members based on their maximum physical production capacity rather than existing quotas. An external consultant has been appointed to assess the capacity of individual producers, with the process expected to be completed by the end of September and formally approved by oil ministers when they meet in late November.

For Iraq, the stakes are particularly high. The country has previously signalled that it could consider leaving OPEC if it is not granted a production baseline that reflects its ambitions, potentially adding to strains within the alliance following the withdrawal of the United Arab Emirates.

Iraq is one of OPEC’s largest producers and was among the countries that founded the organisation, which was established in Baghdad six decades ago. Its government has repeatedly outlined plans to substantially expand production as it seeks to maximise revenues from its vast oil resources.

Oil Minister Basim Mohammed Khudair said in May that Baghdad was discussing with OPEC the possibility of raising production to 5 million barrels per day once the conflict involving Iran ends. Prime Minister Ali al-Zaidi said this month that Iraq ultimately aims to produce about 10 million barrels per day by 2030.

A 6 million-barrel-a-day baseline, however, would be considerably above Iraq’s existing OPEC+ ceiling. Its production ceiling for September and October is 4.431 million barrels per day, while the International Energy Agency estimates Iraq’s sustainable production capacity at about 4.9 million barrels per day.

Actual output has been substantially below both figures. Iraq pumped an average of 2.98 million barrels per day in August, according to a Bloomberg survey, as the conflict involving Iran disrupted oil flows through the Strait of Hormuz.

The question of how much additional Iraqi crude could eventually reach international markets is also significant for the wider oil balance. A resumption of Persian Gulf exports disrupted by the Iran war could increase global supplies and contribute to a renewed surplus, potentially putting pressure on prices and complicating OPEC+ efforts to manage the market.

The capacity review also comes as international oil companies consider expanding their involvement in Iraq. US energy companies including Chevron Corp. and Exxon Mobil Corp. are among firms negotiating a possible return to projects in the country.

Iraq is separately pursuing infrastructure to expand its ability to export crude without relying solely on the Gulf. Oil Minister Hayan Abdul Ghani said on Tuesday that Baghdad was negotiating with a consortium of US and Qatari companies over the proposed Basra-Baniyas pipeline.

The planned route would carry crude from oilfields around Basra in southern Iraq to the Syrian Mediterranean port of Baniyas, potentially providing an alternative export route.

Despite its push for a higher long-term baseline, Abdul Ghani said Iraq remained committed to its OPEC quota and would not increase production beyond 4.2 million barrels per day.

OPEC+ is continuing to monitor market conditions through regular meetings as it balances individual members’ ambitions against the need to prevent excessive supply.

Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Algeria and Oman, the seven OPEC+ countries that had previously announced additional voluntary production adjustments in April and November 2023, met virtually on September 6 to review global market conditions and the outlook, according to the Saudi Press Agency.

The seven countries agreed to maintain the required production levels for October 2026 and reiterated their commitment to achieving full conformity with the Declaration of Cooperation.

They also agreed to continue holding monthly meetings to assess market developments. Their next meeting is scheduled for October 4.

Iraq’s demand for a significantly higher baseline comes as OPEC+ faces broader questions over the cohesion of the alliance. Venezuela, another founding OPEC member, is also examining its future in the organisation as it moves towards a major agreement with US President Donald Trump that would give Washington considerable control over part of its oil reserves.