Oil market: Iraq threatens to withdraw from OPEC

The global energy market is on hot coals following reports that Iraq – the second-largest OPEC producer – is seriously considering the possibility of withdrawing from the cartel. According to exclusive information from Reuters, Baghdad, pressured by a severe financial crisis, is sending an ultimatum to Saudi Arabia and its allies for a significant increase in its production quota, otherwise Iraq will withdraw. Such a development threatens to cause a massive shock to the international prices of "black gold," which are already falling, at a time when OPEC is trying to reorganize following the departure of the United Arab Emirates.

Iraq's ultimatum

Iraq is experiencing a financial crisis as a result of the war with Iran, and a significant increase in its quota within OPEC must be treated seriously, a senior official from the Iraqi Ministry of Oil told Reuters. Iraq had considered the possibility of leaving OPEC, but the current plan is to remain a member and seek a higher production quota, the official added. "Saudi Arabia and other OPEC allies should treat this issue with the utmost seriousness. Otherwise, Iraq will be forced to consider all available options," he stated. When asked if they have discussed the possibility of an exit from OPEC, he said: "It is still too early for such a step." A government spokesman stated that Iraq is working to restore its full oil export capacity but declined to comment further on its OPEC quota or the possibility of leaving the organization. "Iraq is working to restore its full oil export capacity and aims to increase oil production to 7 million barrels per day in the coming years," said Iraqi representative Haider al Aboudi.

Losses for oil prices

Oil prices briefly extended their decline following the Reuters report, falling below $73 per barrel. Since taking office in May, Iraqi Prime Minister Ali al-Zaidi has signaled that rebuilding Iraq's economy, attracting foreign investment, and fighting corruption will be at the center of his government's agenda. On Wednesday, he stated that Iraq wants OPEC to increase Iraqi oil production in line with its production capacity and population, as reported by the state news agency INA. Seven key members of OPEC+ increased their production quotas from April to June by nearly 600,000 barrels per day. OPEC+ includes the Organization of the Petroleum Exporting Countries and allied producers, including Russia.

www.bankingnews.gr