The storm brewing on the Organization of Petroleum Exporting Countries’ (OPEC) horizon over future Iraqi oil output could engulf the producer group sooner than it would like.
“There’s only one issue, but it’s a big one. It’s a tsunami. Iraq,” said Leo Drollas at the Centre for Global Energy Studies.
After years of sanctions and war, Iraq is exempt from the output targets OPEC uses to set supply levels.
But as Baghdad embarks on an unprecedented oil industry development, OPEC will at some point need to bring Iraq back into the fold to prevent millions of barrels of new oil supply undoing its work to balance markets.
OPEC officials and analysts have said the issue is not urgent, as it could be years before Iraq makes significant increases to current output of around 2.5 million barrels per day (bpd). Baghdad’s failure to reach past ambitious targets has fed the skepticism.