Iraq has warned it may ultimately consider leaving OPEC unless the group accommodates it with a higher oil production quota, just a few months after the United Arab Emirates quit the group so that it could pump more.
While the country “currently has no intention of withdrawing,” Iraq believes OPEC should raise its output ceiling, and if this aspiration isn’t granted, “a decision will have to be made regarding whether to remain in or withdraw,” Oil Ministry spokesman Salim Al-Rikabi said.
The departure of another major member would inflict a profound blow to the Organization of the Petroleum Exporting Countries, which has seen its sway over global oil markets frayed in recent years by a tide of supplies from US shale drillers and other rivals, the war in Iran, and the UAE’s recent exit.
Oil futures have given up all their wartime gains, and Iraq’s call to pump more shows how urgently producers want to add barrels back to a market that’s already awash with cargoes. A fragmentation of OPEC could also add to the longer-term possibility of a price war.
A split by Iraq would carry extra symbolism, as it was one of the five crude producers that founded OPEC, which was formally established in 1960 in the country’s capital, Baghdad. It would also have the practical effect of giving OPEC a smaller share of the global market, and therefore less influence. Iraq has chafed against output limits set by OPEC+ ever since the alliance between core OPEC members and other nations such as Russia was formed in 2016, contending that it deserved to revive oil exports and rebuild an economy shattered by decades of conflict and sanctions. Its flouting of official quotas has often earned a rebuke from OPEC’s de facto leader, Saudi Arabia.
Similar tensions helped spur the UAE to announce its exit from OPEC in late April, severing decades of membership. Abu Dhabi had grown impatient to make full use of investments in oil production capacity before the energy transition eats further into fossil fuel consumption. The Saudis had often pressed fellow OPEC nations to withhold crude supplies and support prices, though their stance appeared to shift last year.
For the time being, Iraq remains “committed to operating within the organization’s framework and mechanisms,” the oil ministry’s statement said. “Of course, taking into consideration that the Ministry is moving forward with increasing its production to align with its capabilities and needs, the organization should raise Iraq’s production level,” it continued. “Otherwise, a decision will have to be made regarding whether to remain in or withdraw from OPEC.”
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