Iraq Weighs OPEC Exit to Unlock More Oil Production
Baghdad has signalled it may quit the cartel if refused a higher quota, following the UAE's departure last month.
Iraq, OPEC's second-largest producer, is considering withdrawing from the cartel if the organization refuses to raise Baghdad's production quota, according to sources in the Iraqi government who spoke to local media on Thursday (2026-06-25).5
The calculation is straightforward for Baghdad. Petroleum revenues still account for 90% of Iraq's state budget, leaving the government with little appetite for production ceilings that constrain its primary income source.5
Any formal move — either a quota push or a withdrawal notice — is unlikely before mid-July at the earliest. Iraqi sources told Shafaq News that Prime Minister Ali al-Zaidi's planned visit to Washington, expected in the middle of next month, would precede any decision on OPEC membership or output strategy.5
The warning follows the United Arab Emirates' exit from OPEC on May 1 (2026-05-01), which ended nearly 60 years of membership. Abu Dhabi's departure was driven by the same arithmetic: ADNOC's maximum sustainable capacity stood at 4.85 million barrels per day, but the UAE's quota had been limited to just under 3.5 million bpd — a gap of at least 1.35 million bpd. The UAE's average capacity utilization in 2025 ran at just 66%, against 77% for Saudi Arabia and 84% for Kuwait.1
Iraq faces a structurally similar frustration, though it sits deeper in the revenue trap. Whereas the UAE has diversified significantly into finance, trade and tourism, petroleum sales remain overwhelmingly dominant in Baghdad's fiscal ledger. The quota discipline that provides price support is also the ceiling on the revenues Iraq needs to fund public services and reconstruction.5
OPEC members collectively control about 80% of the world's proven crude reserves but deliberately limit output to roughly 40% of global supply to sustain the price floor that keeps petrostate budgets solvent, according to Al Jazeera. For Iraq, that logic has worn increasingly thin as fiscal pressure mounts and the country watches peers expand capacity it cannot yet access.3
ICE Brent crude front-month was trading at $72.69 on Thursday (2026-06-25), fractionally lower on the day, with no immediate market reaction tied to the Iraqi reports. Traders appear to be treating the news as a diplomatic signal rather than an imminent supply event — the Washington visit and subsequent OPEC consultations put any concrete outcome weeks away.5
Still, the supply arithmetic is not trivial. The UAE, which departed the cartel in May (2026-05-01), has up to 1.6 million bpd of spare capacity it can now bring to market without quota restriction, equivalent to roughly 1.5% of global supply. Adding unconstrained Iraqi output to that figure changes the balance further and complicates Saudi Arabia's ability to anchor prices through unilateral discipline.4
The UAE's exit in May (2026-05-01) did not dissolve OPEC but reduced its production discipline by removing a key swing producer from quota oversight. An Iraqi departure would strip the second-largest member from the same framework, leaving Riyadh as the dominant remaining voice in a smaller cartel with less collective leverage over global supply. Robin Mills, CEO of Dubai consultancy QamarEnergy, noted at the time of the UAE's withdrawal that the gap between quota and capacity had been growing for years.2
The immediate marker is the outcome of PM al-Zaidi's Washington visit, expected in mid-July (2026-07). A quota concession from Riyadh before that visit would relieve the pressure materially; a rejection would likely sharpen it. OPEC's next ministerial meeting will be the forum where Iraq's ultimatum either resolves or escalates.5