Iraq warns OPEC: Without increased production quotas, we may consider "leaving the group"

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Iraq sends a tough signal to OPEC: either raise Baghdad’s oil production quota, or face the risk of yet another member leaving. This stance puts renewed pressure on OPEC, which was already hit hard by the UAE’s exit.

According to Bloomberg’s latest report, Iraq’s oil ministry spokesperson Salim Al-Rikabi said via text message on Thursday that Iraq "currently has no intention to leave OPEC," but also warned that if OPEC doesn’t raise Iraq’s production limit, "we will have to decide whether to stay in or exit OPEC." This statement immediately triggered a market reaction.

However, within hours, Iraq’s oil ministry issued another statement to cool down the situation, saying "the reports about Iraq considering ending its OPEC membership do not represent the official position of the Iraqi government, and neither the Prime Minister nor the government has proposed leaving the organization."

These contradictory statements come as Iran, a Middle Eastern nation, is ramping up production after the war. Market participants worry that if Iraq ultimately follows the UAE and leaves OPEC, it will further weaken the organization’s ability to maintain a price floor and intensify global crude oversupply pressure.

After the UAE’s exit, OPEC faces renewed centrifugal shocks

Iraq’s threat comes just about two months after the United Arab Emirates formally left OPEC.

The UAE left the group in April this year, citing its continuously expanding capacity target—planning to increase output to 5 million barrels per day by 2027—which fundamentally conflicted with OPEC’s quota framework. At the time of its exit, the UAE’s production was around 4.05 million barrels per day, making it a key player within OPEC.

After the UAE’s departure, OPEC currently has 11 member countries, including Algeria, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, and Venezuela. If Iraq leaves, it will be another major blow to the organization’s cohesion.

Iran war severely damages Iraq’s finances, urgent demand for increased production

According to reports, the main reason Iraq is seeking a higher production quota is to make up for oil revenue lost during the Iran war. The war dealt unprecedented blows to Persian Gulf oil supplies, with all countries in the region losing millions of barrels in sales, and Iraq’s fiscal situation suffering the most.

During the war, OPEC gradually allowed more production for member countries, but Iraq believes its current quota still does not fully reflect its actual capacity and fiscal needs. Al-Rikabi stated in the announcement that Iraq is pushing forward with plans to increase production so that output matches its capacity and needs, and has requested OPEC to raise its quota accordingly.

Behind the mixed signals: pressure tactics in quota negotiations?

According to analysts, Iraq’s "open threat and quick reversal" operation comes exactly at the key moment when OPEC and its partners are evaluating technical production capacities and setting output targets for next year. The timing is intriguing—expressing willingness to exit may be Baghdad’s way of pressuring for higher quotas in negotiations.

Meanwhile, Middle Eastern oil-producing countries have collectively accelerated production after the Iran war, with supply surplus concerns rising and oil prices coming under downward pressure. Against this backdrop, if centrifugal tendencies within OPEC spread, the organization’s ability to coordinate production and stabilize prices will be further questioned. For oil market investors, this uncertainty is worth watching closely.

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