Iraq is the second-largest producer in OPEC and fifth-largest globally
OPEC, headquartered in Vienna was established in Baghdad in 1960. Photo by Christian Bruna/Getty Images
It would appear the Iraqi government is trying to send a none-too-subtle message to its partners if the Organization of the Petroleum Exporting Countries: "Let us pump more freely or we are leaving."
The threat of leaving the club appeared to be communicated in a deliberate and calculated manner with journalists in the Middle East and from Reuters and Bloomberg all revealing direct comments from Iraq's oil ministry spokesman, Salim Al-Rikabi, its new prime minister and a senior official early Thursday.
If Iraq were to announce its exit, the repercussions of its higher output would be detrimental to the price of oil that's already plummeting and appears to be reacting negatively to the ultimatum.
In Thursday trading, Brent (BRN00) was trading 1% lower at $73 per barrel, a long way down from its March peak at the onset of the crisis in the Strait of Hormuz when it spiked to almost $120 a barrel. Brent is now down close to the price at which it traded before hostilities commenced.
It was one thing for OPEC to contend with the departure of the Qataris in 2019 and the United Arab Emirates who quit May 1 this year. The Qataris produced mostly gas and U.A.E. was pumping approximately 3.4 million barrels, accounting for just a few percentage points of OPEC's overall output. Both joined after the original cartel was formed.
Iraq, though, was a founder member of OPEC when it was established in 1960, and is the second-largest by output behind Saudi Arabia, producing around 4.5 million barrels of oil daily. Whether it's in or out of OPEC, it's status is therefore immensely significant for the supply-demand balance of the global oil market.
Oil production by country 2025
Rikabi told Bloomberg that Iraq had "no intention of withdrawing from OPEC," before going on to describe exactly that possibility because the country was focused on "increasing its production to align with its capabilities and needs." According to the U.S. Energy Information Administration, Iraq could, if it chose to ignore quota restrictions, lift its production to 7 million bpd by 2029, an increase of at least 75% from today.
The Iraqis seem, at the very least, to be sending a subliminal message to the Saudis of their dissatisfaction with their current production allowance.
Iraq's new prime minister, Ali Al-Zaidi, suggested to journalist Hadley Gamble that American companies will be given top priority when it comes to investing in Iraq's oil industry, perhaps suggesting, as with the U.A.E., that the U.S. is encouraging the dissolution of OPEC, or lessening its price-setting power, as a means of lowering the cost of oil.
Companies like Halliburton $(HAL)$, Exxon (XOM) and Chevron $(CVX)$ have been cited as potential beneficiaries.
This month, the U.S. revealed its Strategic Petroleum Reserve had fallen to a forty-three-year low, suggesting it may be anxious to rebuild stockpiles.
If OPEC were to lose a major and longstanding contributor so soon after the exit of the U.A.E., then oil markets might start to discount its ability to control oil prices or prop them up when they fall. The damage caused to Gulf economies by the Iran war is considerable and many have urgent funding requirements for rebuilding and reinvestment.
The unambiguous threat from Iraq may be interpreted by traders as another nail in the OPEC coffin, increasing the prospects of an oil glut at some stage as producers increase quotas to suit their own domestic requirements.
-Jules Rimmer
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(END) Dow Jones Newswires
June 25, 2026 07:57 ET (11:57 GMT)
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