Oil in Global Economy Series: Iraq approves oil production capacity boost

The Iraqi government, which was one of the hardest among OPEC members to be convinced of a production ceiling when the production agreement was reached in November 2016 has finally approved the increase in production capacity despite being a part of the OPEC agreement that has put production ceiling on almost every members in order to reduce production by 1.2 million barrels per day compared to the October 2016 level with an ultimate aim to reduce global supply imbalance.

According to Iraq’s energy ministry, Baghdad has approved an increase of production capacity to 6.5 million barrels per day by 2022, compared to the current production capacity of below 5 million barrels per day. Under the agreement, Iraq’s production ceiling has been set at 4.351 million barrels per day, which the country has breached many a time since the agreement came into force January last year.

At the same time, Iraq’s oil minister Jabbar al-Luiebi said that the country’s proven oil reserves could be much higher than the current estimate of 153 billion barrels, which was revised higher only last year from 143 billion barrels. While the oil minister has confirmed that Iraq would continue to comply with the production agreement, the country is planning to tender 11 new oil fields later this month. The tender does pose doubt about Iraq’s pledge to be a part of the OPEC agreement.