Iraq acknowledges OPEC+ overproduction, vows compensation and quota adherence

Iraq on July 13 acknowledged it produced 184,000 b/d over its OPEC+ quota in June, based on secondary sources estimates, and pledged to compensate for its excess output by a September 2025 deadline under the latest OPEC+ agreement by making additional cuts of equivalent volume.
OPEC’s second largest oil producer has habitually pumped more crude than allowed for under its OPEC+ quota, drawing the ire of other members, but said in a statement that it will adhere to the 4 million b/d limit for the coming months. Iraq has not yet publicly revealed its compensation plan.

“Iraq affirms its complete commitment to the agreement and to the voluntary adjustments, and will compensate for any overproduction since the beginning of 2024,” the statement from Iraq’s oil ministry said.

Iraq in June cut output by 60,000 b/d to 4.22 million b/d, according to the latest Platts OPEC+ survey from S&P Global Commodity Insights, one of seven secondary sources used by the producer alliance to monitor member production.

According to data reported by the oil ministry, Iraq’s crude exports in June totaled 3.299 million b/d, in line with the government’s pledge to hold its international shipments below 3.3 million b/d, but the country’s refining runs, direct burn for power generation, stock movements and production in the semiautonomous Kurdistan region combined to bring Iraq’s total output above its quota, the survey found.

Baghdad says that because Kurdistan lies out of its purview and state marketer SOMO does not have oversight over Kurdish oil sales, it cannot know production figures in the region. But it insists that Kurdish production cannot be as high as 300,000 b/d — though some sources say it is possible, given a thriving domestic market and alleged smuggling across the border to Iran, Turkey and Syria.

Iraq’s federal government and the Kurdistan Regional Government have been locked in a sovereignty dispute over Kurdish crude production, which has kept the region’s key export pipeline to the Turkish port of Ceyhan closed since March 2023. Prior to the pipeline’s closure, Kurdish production averaged roughly 400,000 b/d. About 50,000 b/d of federally produced Kirkuk grade has also been prevented from export due to the pipeline closure.

The OPEC+ alliance has made several rounds of production cuts over the past two years to help shore up the market, including some 2.2 million b/d of voluntary cuts by Iraq and several other members from mid-2023 that are scheduled to begin tapering from October.

Iraq, Kazakhstan and Russia are the three OPEC+ members obligated to submit compensation plans for exceeding their quotas throughout 2024.

Kazakhstan’s Energy Ministry said July 8 it will submit an updated plan after secondary sources release output data for June, which was published in OPEC’s July 10 monthly oil market report. Russia has not commented on its compensation plans.

The OPEC+ joint ministerial monitoring committee, co-chaired by Saudi Arabia and Russia, is scheduled to meet online Aug. 1. Among its duties, it assesses member compliance with quotas and can also recommend changes to OPEC+ production policy.

The full 22-country OPEC+ alliance is scheduled to meet Dec. 1.
Source: Platts