Iraq to cut oil exports amid OPEC+ pressure to comply with production limits

(Bloomberg) – Iraq plans to cut oil exports next month as OPEC+ presses members to adhere to production targets, according to an official with knowledge of the matter.

OPEC’s second-largest producer aims to reduce shipments by roughly 100,000 barrels a day to an average of 3.2 million barrels a day in May, the official said, asking not to be identified as the figures aren’t public. 

The Organization of the Petroleum Exporting Countries and its partners announced last month they would gradually start reviving production halted two years ago, but sought to offset the increases by insisting on better discipline from quota-violators. Iraq, along with some other members of the OPEC+ alliance, is under pressure from the group’s leaders to make extra supply curbs as compensation for overproducing during the past year.

OPEC+ uses oil production rather than exports to measure compliance with its targets. Iraq’s output was about 90,000 barrels a day more than its target last month, according to figures used by OPEC+, while estimates from the International Energy Agency put the figure at more than 300,000 barrels a day above its quota. 

While Iraq’s export reduction may indicate it has correspondingly curbed production, an associated drop isn’t guaranteed. The country has in the past often promised quota adherence and then failed to deliver.

Baghdad has long chafed against OPEC+ output limits, as it seeks to rebuild its economy and trading relationships after decades of sanctions and conflict. The country would need an oil price of $92 a barrel in order to cover government spending this year, according to the International Monetary Fund. Brent crude futures are trading near $65.

Oil has tumbled this year, dropping sharply the past two weeks as US President Donald Trump’s sweeping tariffs upended global markets. The lower price puts particular pressure on Middle Eastern economies that are dependent on oil. Iraq, especially, needs higher prices to support spending as it rebuilds an economy weakened by years of war.

Data from OPEC+ released on Wednesday showed that Iraq made some notional progress with its compensation backlog last month, while Kazakhstan — the group’s biggest offender — instead overshot its limits even more starkly.