Iraq warns it may quit OPEC unless production quotas are raised

[Financial News, New York = Lee Byung-chul] Iraq, which is facing a severe fiscal crisis in the wake of the U.S.-Iran war, has demanded that the Organization of the Petroleum Exporting Countries (OPEC) expand its crude production quota and warned that it may consider leaving the group if its request is not accepted. Analysts say the move suggests growing rifts within OPEC, as the United Arab Emirates (UAE) left the group in April and Iraq, one of its founding members, is now also raising the possibility of an exit.
Iraq's oil ministry said on the 25th that it has no plan to leave OPEC for now, but that its crude production quota should be increased in the future. A ministry spokesperson said, "If we are not allowed to increase production, we will have to decide whether to remain in OPEC or withdraw."
Iraq relies on oil sales for most of its state revenue. But with oil exports through the Strait of Hormuz effectively blocked by the U.S.-Iran war, fiscal income has plunged. The newly formed government has been forced to print additional currency just to pay public-sector wages, deepening the financial strain.
The remarks came after the UAE quit OPEC in April following disputes over production quotas and tensions with Saudi Arabia. Later in the day, however, Iraq's oil ministry softened its tone, saying through state media that reports claiming Iraq had threatened to leave OPEC did not reflect the government's official position. It still reaffirmed its view that production limits should be reassessed in line with members' sustainable production capacity.
Last year, OPEC commissioned U.S. consulting firm DeGolyer and MacNaughton to assess member countries' production capacity, and it plans to use the findings to decide new production quotas to be applied from 2027.
Before the U.S.-Iran war, Iraq was OPEC's second-largest oil producer after Saudi Arabia. It is now focusing on attracting foreign investment to expand oil output. Chevron is also in exclusive talks to acquire operating rights for the West Qurna 2 oil field, which had been run by Lukoil.
Iraq is one of OPEC's five founding members. If it were to actually leave, analysts say the cohesion of the oil producers' group could be seriously shaken. Paul Horsnell, chairman of the board at the Oxford Institute for Energy Studies, told the Financial Times that "if Iraq is found to have additional production capacity, there is a strong chance its production target will be raised" and that "its share of OPEC's overall production quota is also likely to increase."




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