Iraq’s 5 Million Bpd Oil Claim Complicates Its OPEC Quota Push

Iraq's campaign for a larger OPEC production allocation has taken a complicated turn after Oil Minister Basim Mohammed Khudair said the country is already producing more than 5 million barrels per day, more than half a million barrels above its current OPEC+ requirement. Khudair’s statement raises a basic question over Iraq’s current production as OPEC prepares to set production levels for 2027. Just six days earlier, Baghdad joined six other OPEC+ producers in agreeing to maintain current production requirements for December, leaving Iraq at 4.431 million bpd. Shortly after Khudair put Iraqi production above 5 million bpd, the Oil Ministry reaffirmed Iraq's commitment to the 4.431 million bpd ceiling, saying October production had increased but giving no figure.Baghdad has spent months trying to persuade OPEC to recognize substantially more Iraqi production capacity. Iraq is seeking a future baseline based on capacity of around 6 million bpd, while OPEC is independently assessing members' maximum sustainable production capacity as it prepares its 2027 production framework. Iraq reported production of 4.399 million bpd to OPEC in September, before the Oil Ministry reported a further increase in October without providing a figure.The OPEC Word GameKhudair said Iraq remained compliant with OPEC because its exports were within what he described as the group’s “export ceiling.” But Iraq’s 4.431 million bpd OPEC+ requirement is a production target, not an export target.OPEC’s rules are explicit on this point. Compliance is assessed using crude oil production, based on estimates from independent secondary sources. As Bloomberg’s Javier Blas has explained, OPEC+ has occasionally allowed individual countries to make commitments based partly on exports, most notably Russia, creating an increasingly complicated collection of cuts and targets. But that is not how Iraq’s current 4.431 million bpd requirement is defined: it applies to crude production.For Iraq, exports and production can differ significantly. Crude produced in Iraq can be exported, domestically refined, directly consumed for power generation or moved into storage. Iraq’s OPEC+ requirement, however, is measured against crude production rather than the volume ultimately exported.That is why Khudair’s explanation does not resolve the problem created by his own production figure. Iraq could export less than 4.431 million bpd and still produce more than its OPEC+ requirement. And if Khudair’s figure of more than 5 million bpd refers to crude production as OPEC defines it, it would put Iraqi output at least 569,000 bpd above the nominal requirement.OPEC does not simply use Baghdad’s reported production number when assessing compliance. It uses estimates from independent secondary sources, and those estimates can differ substantially from Iraq’s own figures. Khudair’s statement therefore does not establish that OPEC itself will record Iraqi production above 5 million bpd. But his reference to exports does not explain how production above that level would comply with Iraq’s production requirement.Has the Iran War Changed the Rules?Khudair’s choice of words, however, deserves a closer look.The U.S.-Iran war has radically changed the relationship between production and exports across the Gulf. For months, Iraq, Saudi Arabia and Kuwait have been producing below their OPEC+ allowances as the closure of Hormuz and continuing shipping disruptions restricted Gulf exports.That raises an obvious question as to whether OPEC has quietly become more interested in how much oil its members can actually export than how much they produce.So far, there is no direct indication that it has. OPEC’s Joint Ministerial Monitoring Committee (JMMC) directly addressed the disruption to international maritime routes in October, but continued to assess members using crude oil production data and adherence to production adjustments. OPEC ministers returned to the Hormuz problem on October 12, saying unprecedented shipping and insurance costs were impeding crude and product flows, without announcing any change in the way compliance is measured.On November 1, with Gulf exports still severely constrained by the war, OPEC+ maintained its existing production requirements for December and again called for full conformity. Reuters reported that the group was still struggling with export disruptions caused by the war even as it kept those production targets unchanged.Is Iraq Really Producing 5 Million BPD?Khudair’s production figure is also difficult to reconcile with the independent data available so far.Iraq reported crude production of 4.399 million bpd to OPEC in September, meaning output would have had to rise by at least 601,000 bpd in October or early November to reach the level Khudair described. The IEA estimated September production considerably lower, at 4.10 million bpd.The IEA also estimated Iraq’s sustainable production capacity at 4.87 million bpd, below the level Khudair now says the country is actually producing.Exports certainly recovered. Iraq shipped about 3.5 million bpd in October, according to Iraqi energy officials cited by Reuters, up from 2.65 million bpd in September. At that export rate, production above 5 million bpd would leave more than 1.5 million bpd to be accounted for by refinery intake, domestic crude use, inventory changes and other movements.The missing number is October production. OPEC has yet to publish its first secondary-source estimate for the month, leaving no independent OPEC production figure that confirms the increase Khudair described.By Charles Kennedy for Oilprice.comMore Top Reads From Oilprice.comIndia’s HPCL Struggles to Secure Oil Tankers as Hormuz Risks PersistAsia’s Fuel Oil Market Signals Hopes of U.S.-Iran De-EscalationFGE NexantECA Sees Slim Chance of U.S.-Iran Deal