Iraq has escalated its demand for a larger OPEC production quota as a direct response to an economic squeeze driven by war-related export losses and a new inflow of investment commitments from international oil companies.
That push has the potential to deepen tensions within the Organization of the Petroleum Exporting Countries, which is still grappling with the fallout from regional conflict and the shock exit of the United Arab Emirates after nearly 60 years of membership. The Iran war forced substantial export cuts that compounded existing divisions among core Gulf producers.
As one of OPEC’s five founding members and the producer bloc’s second-largest oil exporter, Iraq suffered a major fiscal hit when oil receipts - which account for the bulk of its government revenue - fell dramatically during the period when the Strait of Hormuz was effectively closed to large volumes of cargo. An Iraqi energy adviser, speaking on condition of anonymity because of the sensitivity of the issue, framed the quota bid in stark fiscal terms: "Iraq’s demand for a larger OPEC quota is primarily a response to mounting economic pressures."
With the fragile U.S.-Iran truce now promising to reopen the Strait of Hormuz, Iraqi authorities are moving quickly to restore oil revenues and are evaluating all levers available to accelerate cash inflows if their OPEC quota is not increased significantly. According to sources, Baghdad has even considered the possibility of leaving the producer group; Prime Minister Ali Faleh al-Zaidi, however, said in a statement that such a move had not been discussed.
Investment commitments raise expectations for more output
The belief within Baghdad that it should capture a larger share of revenue from its oil resources has been strengthened by a stream of high-value deals signed since early 2025 with international majors that had largely avoided Iraq previously because of instability. Those commitments include BP's pledge of up to $25 billion to redevelop four giant fields in Kirkuk, TotalEnergies’ $10 billion project in Basra, an ExxonMobil agreement to develop the Majnoon field, and indications that Chevron has considered a return.
While these contracts underline renewed confidence in Iraq’s resource base, industry observers caution that converting contractual commitments into materially higher exports will require substantial additional spending on field development and, crucially, on export and midstream infrastructure.
Revenue needs remain acute
Even by the standards of oil-dependent Gulf states, Iraq’s fiscal reliance on petroleum is exceptional. World Bank figures show oil represented 88% of Iraq’s government revenue last year. By contrast, Saudi Arabia relied on oil for roughly 55% of government receipts, according to that country’s finance ministry data cited in official records.
The war aggravated Iraq’s exposure by curtailing exports. OPEC data indicate Iraq produced 1.48 million barrels per day (bpd) in May, a sharp fall from almost 4.2 million bpd in February, before the effective closure of the waterway. The International Energy Agency has estimated Iraq’s production capacity at 4.9 million bpd and said the country could reach that level within 90 days. That capacity figure is more than 500,000 bpd - roughly $36 million per day at prevailing price levels - higher than Iraq’s July OPEC quota of 4.378 million bpd.
"From Baghdad’s perspective, the message is simple: we need more barrels and more revenue," the Iraqi energy adviser said.
Ambitious targets, persistent execution risks
Beyond the immediate push for quota relief, Iraq’s planning documents and statements from officials indicate longer-term ambitions to lift production well above current OPEC limits. Three Iraqi oil officials said the country is aiming for production of 7 million bpd in the coming years. Major international companies involved in recent deals have characterized their interest as long-cycle growth investments that secure them access to significant resources.
Yet analysts and former industry managers highlight the practical obstacles that have historically limited Iraq’s ability to translate declared targets into sustained output gains. Mercedes McKay, a senior upstream analyst at Energy Aspects, cautioned: "Reaching 7 million bpd faces substantial headwinds and looks extremely optimistic," noting that continuing export infrastructure constraints will restrict how quickly new capacity can be brought online.
Iraq’s past ambitions have been scaled back before. An earlier plan to expand capacity to 12 million bpd was revised downward in 2012 after international firms negotiated lower output targets, pointing to high natural decline rates, low recovery factors and insufficient infrastructure investment as core reasons.
Investment needs and reputational hurdles
Experts stressed that attracting the caliber and volume of capital necessary to develop fields and remedy midstream bottlenecks will be challenging. The country must not only secure financing but also overcome lingering perceptions that have made foreign companies cautious in earlier periods.
Mohammed Abbas, a former manager at the state-run Basra Oil Company who now works as an energy consultant, pointed to continuing structural and governance issues in the sector: "The sector continues to face ... regulatory uncertainty, security challenges, political instability and delays in project execution," he said.
Prime Minister al-Zaidi, who took office last month, has prioritized economic reconstruction and foreign investment as central elements of his agenda. He has said that U.S. companies seeking opportunities in Iraq will receive priority attention, and he is scheduled to visit Washington in mid-July with backing from U.S. President Donald Trump.
Nonetheless, the combination of urgent fiscal needs, fresh upstream commitments, and the practical limits imposed by midstream infrastructure and execution risk creates a complex policy and commercial environment. Even with major international partners now engaged, the pace at which Iraq can increase exports and convert higher production into government revenue will depend on solving long-standing bottlenecks.
Summary
Iraq is pressing OPEC for a larger production quota to address significant revenue shortfalls caused by war-related export disruptions and to capitalize on a recent wave of multi-billion-dollar investments from international oil majors. While capacity estimates suggest room to increase output, analysts and industry insiders warn that export infrastructure limits, regulatory uncertainty and project execution risks could slow the translation of investment and capacity into sustained higher exports and fiscal relief.