Iraq shelves demand for Opec+ crude quota review

Iraq is unlikely to push for a revision of its Opec+ production baseline at the group's upcoming meeting, despite recent calls for a quota review from the country's newly appointed prime minister, a source with knowledge of the matter told Argus.

Iraq's new prime minister Mohammed Shia al-Sudani said on 15 November that he wants a review of Baghdad's Opec+ crude output target. But it looks like the government has decided against raising the issue at the group's ministerial meeting in Vienna on 4 December.

"Iraq's government, which is in a conversation with [state-owned oil marketer] Somo, will adhere to the current production quotas," the source said. "Also, the market situation today does not allow for an increase in baselines, whether for Iraq or any other Opec+ members."

Opec+ quota changes are often implemented through adjustments to members' baseline levels. Iraq, Saudi Arabia, Kuwait, Russia and the UAE all benefited from such a baseline recalibration earlier this year.

Baghdad's apparent change of heart follows a visit to Saudi Arabia by Iraq's new oil minister Hayan Abdulghani at the invitation of his Saudi counterpart Prince Abdulaziz bin Salman. At their meeting on 24 November, the two oil ministers stressed the importance of adhering to the decisions taken by Opec+ at its last ministerial meeting in October — namely to lower the group's collective production target by 2mn b/d from November through until the end of 2023.

In recent days, a string of Opec+ oil ministers have gone on the record to deny a report suggesting that the producer group is discussing whether to partially reverse the 2mn b/d cut with a 500,000 b/d quota hike. Several Opec+ sources have told Argus that talk about an increase in production targets is not aligned with the market. "The market can't handle any increase in production, especially given the situation in China... with its crude demand declining," one source said. "I don't see any chances for a production increase at the moment," another source said.

The 2mn b/d cut in the overall ceiling pushed Iraq's own production target down by around 220,000 b/d from October to 4.43mn b/d this month. Iraqi crude production stood at 4.6mn b/d in October, 50,000 b/d below its target for the month, according to Argus estimates.

Despite reiterating its commitment to the current output restraint deal, Iraq expects to push forward with plans to expand its crude production capacity in the coming years. Former oil minister Ihsan Ismael had outlined a target to ramp up capacity to 8mn b/d by 2028. But more recently, the head of Somo, Alaa Alyasri, said the plan is to increase to around 7mn b/d by 2027. "This indeed is the plan because we have the reserves in the ground," a source said. "But we need to conduct the proper planning and make the right investments in this regard. It is a plan on paper for now."

By Bachar Halabi