By John Lee.
Iraq and Iran, which together hold more oil reserves than Saudi Arabia, are planning to challenge Saudi Arabia's grip on OPEC and its status as the "swing producer" in the cartel, according to a report from The Telegraph.
With Iraq poised to triple its capacity to 9 million bpd by 2020, the result could be a dramatic fall in oil prices.
Hussain al-Shahristani (pictured), Deputy Prime Minister for Energy, said:
"We feel the world needs to be assured of fuel for economic growth ... It's very difficult to predict actual world (oil) demand by 2020 because the world economy is unpredictable ... Iran has been in touch with us; they want to share our contracts model and experience."
This news that Baghdad is working with Iran to help it attract investment ahead of the possible lifting of sanctions could be seen as a challenge to Saudi Arabia. Oil companies are understood to be queuing up to win Iranian oil deals.
The report speculates that, even if Iraq is able to achieve its target of boost production capacity as planned, it is unlikely to be able to put in place sufficient pipeline and port infrastructure to export the additional crude; the main export terminal near Basra will require billions of pounds worth of improvements in addition to the refurbishment of its pipeline network.
Currently, crude oil exports account for 93 percent of Iraqi government revenue.
(Source: The Telegraph)