OPEC decides to halt planned production increase due to Iraq’s overproduction
(MENAFN) Iraq’s oil industry has repeatedly fallen short of its potential, making it easy to overlook its significant influence. However, on Thursday, OPEC decided to halt its planned production increase, with Iraq's overproduction playing a major role in this decision. With new projects in the pipeline, Iraq's future oil output will be a critical factor for OPEC’s broader production strategy moving forward.
Three countries—Russia, Kazakhstan, and Iraq—have submitted compensation plans to OPEC to address their past overproduction issues. However, the latest two-month delay in reducing overall production cuts complicates these efforts. In July, Russia’s oil output reached 9.089 million barrels per day (bpd), exceeding its OPEC target of 8.978 million bpd. The country’s short-term production outlook hinges on its ability to access markets under sanctions, while medium-term prospects depend on domestic financing and technology to develop new oil fields as older ones deplete.
Kazakhstan also surpassed its target in July, producing 1.545 million bpd compared to the OPEC goal of 1.468 million bpd. The country aims to increase capacity to 2.11 million bpd by 2027, largely through expanding its key fields: Tengiz, Kashagan, and Karachaganak. However, without significant new oil discoveries, Kazakhstan’s production is expected to peak around 2030, making the next few years crucial for its future output.
Iraq, meanwhile, produced 4.251 million bpd in July, significantly above its OPEC target of 4 million bpd, making it the leading violator of production limits. On Saturday, Iraq’s oil ministry revealed plans to raise output to 6 million bpd by 2028. To compensate for its current overproduction, Iraq has committed to cutting its output by about 100,000 bpd below target for the remainder of the year. Complicating its compliance is the shutdown of the Iraq-Turkey pipeline, which has been out of service since March following an arbitration ruling. Despite Turkey's readiness to resume operations, ongoing negotiations between the Kurdish regional government and Iraqi federal authorities have yet to result in a final agreement.
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