The International Energy Agency’s (IEA) recently published annual oil report included the following highlight: “Iraq is strengthening its position as one of the world’s major crude oil producers. As the third global source of new supplies, the country is also driving the growth in supply within OPEC until 2024. Iraq's increased production of crude oil will need to make up for the significant drop in the positions held by Iran and Venezuela, as well as the ongoing fragile situation in Libya. The implications of these developments on energy security are significant and could have lasting consequences.”
With production in January of this year standing at 4.7 million barrels per day (bpd), and exports of almost 3.7 million bpd, Iraq is rapidly moving up the ranking of OPEC’s crude oil producing countries. Currently in second place behind Saudi Arabia (see chart 1), it’s quickly becoming a global power in the field of oil production. The country sees black gold as a means to revive the national economy, defuse fierce internal social conflicts and start the process of reconstructing the regions devastated by jihadist militias in the black years of the Caliphate (2014-2017). The political initiative aims to achieve multiple goals: to gradually increase production and export capacity, diversify export terminals and modernize infrastructure.
It’s an ambitious project, as the conflicts that have plagued Iraq for 40 years have put a severe strain on its national oil industry. They include the eight-year war with Iran in the 1980s and the long embargo imposed on the country after the unfortunate invasion of Kuwait by Saddam Hussein, a fuse that triggered the first Gulf War. The UN Oil-for-Food program, implemented to punish the regime in 1995 (and which stayed in place until 2003), effectively blocked the country’s production activities. These activities restarted slowly under the control of western multinationals after the overthrow of Saddam Hussein’s regime and the arrival of the so-called “coalition of the willing,” led by the U.S. (see chart 2).