Iraq has asked the OPEC leadership for a significantly higher crude oil production baseline for future quotas, Bloomberg has reported, citing unnamed sources with knowledge of the matter.
According to these sources, Baghdad wants its future quotas in the group to be set on a daily production baseline of 6 million barrels of crude. This is substantially higher than the country’s current production rate, which, as of August, stood at some 3.37 million barrels daily. However, the August daily average was markedly higher than the July average, which stood at 2.77 million barrels daily.
Also in August, Iraq’s Prime Minister said the country will seek to boost oil production to between 8 and 10 million barrels daily in the next six years, despite current war-related disruptions. Before the war began, Iraq was producing some 4 million barrels daily. At the time, Iraq had sent a delegation to Saudi Arabia to negotiate a higher baseline for production quotas in OPEC.
The country has been among the producers hit hardest by Iran’s effective closure of the Strait of Hormuz, historically Iraq’s primary crude export route. Iraq has managed to push exports through Hormuz back to around 2 million bpd last month, but traffic through the chokepoint remains well below pre-war levels, especially in the past week after the United States and Iran began fighting again.
Still, Iraq has benefited from a special exemption granted by Iran to tankers carrying Iraqi crude, which were given the green light to pass through the Strait of Hormuz. It was unclear if the exemption concerned all tankers carrying Iraqi crude or only some, but the fact is that Iraqi flows out of the Persian Gulf have rebounded. However, due to the Hormuz blockage, Iraq has had to offer buyers substantial discounts to place its crude.
By Irina Slav for Oilprice.com
