Economy June 26, 2026 01:09 PM

Iraq Seeks OPEC Quota Reassessment as Output Recovery Begins

Baghdad urges allocation review to reflect economic and security realities while denying talks of an OPEC exit

By Nina Shah
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Iraq's Oil Ministry said OPEC has begun a phased restoration of the country's pre-war production allocations. The ministry said this step will bolster Iraq's capacity and aid recovery of its oil sector, and reiterated Baghdad's support for reassessing quotas to reflect member states' conditions. The prime minister has not discussed leaving OPEC, though reports say Baghdad has considered withdrawal if it cannot boost production.

Iraq Seeks OPEC Quota Reassessment as Output Recovery Begins
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Key Points

  • OPEC has begun a phased restoration of Iraq's pre-war production allocations, a move the Iraqi Oil Ministry says will bolster the country's output capacity and aid oil-sector recovery - sectors impacted: oil production, national fiscal revenues.
  • Baghdad supports reassessing OPEC quotas to better reflect members' specific economic and security conditions, highlighting the interplay between geopolitics and oil policy - sectors impacted: energy markets, government budget planning.
  • Iraq's July quota is 4.378 million barrels per day but actual production is substantially below that level due to export disruptions via the Strait of Hormuz - sectors impacted: export logistics, regional trade flows.

Iraq's Oil Ministry announced on Friday that OPEC has initiated a gradual reinstatement of the nation's pre-war production allocations, a move the ministry said will strengthen Iraq's output capacity and support the recovery of its oil sector.

In a statement carried by the state news agency, the ministry said Baghdad backs a reassessment of OPEC production quotas to better reflect the conditions of member countries, explicitly citing Iraq's economic and security circumstances as relevant factors behind that position.

The same statement noted that Iraq's Prime Minister Ali Faleh al-Zaidi had not held discussions about the possibility of Iraq leaving OPEC. That clarification came after an earlier report on Thursday indicated that Iraq - OPEC's second-largest producer after Saudi Arabia and one of its five founding members - has contemplated leaving the group if it is not permitted to significantly increase oil production.

The ministry's comments emphasized the link between quota restoration and Iraq's ability to rebuild oil-sector capacity. Iraq depends on oil for the bulk of its government revenue, and those revenues have been curtailed since the Iran war effectively blocked exports through the Strait of Hormuz, according to the statement.

For July, Iraq's official OPEC quota is set at 4.378 million barrels per day, though the country is producing well below that level at present because of disruptions tied to the Hormuz situation, the ministry said. The statement also noted that the United Arab Emirates left OPEC less than two months ago.

The ministry framed both the phased restoration of allocations and a formal quota reassessment as measures to align OPEC policy with on-the-ground realities faced by members. It reiterated that Baghdad seeks changes that would better reflect member states' differing economic and security environments while denying that formal discussions about an OPEC exit have taken place among the country's leadership.


Summary

OPEC has started restoring Iraq's pre-war production allocations, which Baghdad says will help rebuild output capacity and revive the oil sector. Iraq supports a quota reassessment to account for member states' economic and security conditions. Officials denied talks of leaving the group, though separate reporting indicated Iraq has considered withdrawal if it cannot raise output.

Risks

  • Ongoing disruptions tied to the Iran war and the effective blockade of exports through the Strait of Hormuz continue to reduce Iraq's oil output and revenues, creating uncertainty for fiscal planning and energy markets.
  • If OPEC does not agree to a quota reassessment or allow a significant production increase, Baghdad has reportedly considered the possibility of leaving the group, introducing political and market uncertainty for oil producers and consumers.
  • Despite a July quota of 4.378 million barrels per day, current output remains materially below that level because of the Hormuz disruption, posing operational and revenue risks for Iraq's oil sector and state finances.

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