In spite of still struggling to recover from the 2003 war and the continuing Islamic State (IS) insurgency, Iraq produced a record amount of oil last month, the country's oil minister announced at the weekend.
Unveiling production of 4 million barrels of crude per day in December, Adel Abdel Mehdi told reporters that the total was " a historical figure, and the first time Iraq has achieved this."
Speaking at a joint press conference with his Turkish counterpart Taner Yildiz in Baghdad, the Iraqi minister added the production increase would "make up" for the recent slump in oil prices. Iraq, where lawmakers are now looking at a 2015 draft budget based on an average of $60 dollars a barrel, depends on crude exports to generate over 90 percent of government revenues.
The barrel export count, if confirmed, also trumps estimates of 3.7 million b/d by the International Energy Agency (IEA) published last week. The agency's report also identified Iraq as the main driver behind a rise in OPEC supply in December by 80,000 b/d to 30.48 million b/d .
Iraq has not pumped as much crude oil since 1979, when the previous record was set with 3.56 million b/d . The December total would make Iraq OPEC's second largest producer, behind Saudi Arabia at around 7 million b/d and ahead of Iran, the United Arab Emirates and Kuwait which each produce 2.7 b/d.
"It's quite a significant increase, but in-line with all the investment that was done over the last 10 years," Samir Kasmi, partner at Dubai-based advisory firm CT&F, told CNBC. "They are not subject to an OPEC quota at the moment, and could flood the market".
Abdel Mehdi explained production in the city of Kirkuk, which was held by IS troops last year before being liberated in June, would reach 375,000 b/d for the first three months of 2015. Production would eventually rise to 600,000 b/d by April.
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Oil exports from the northern region are piped through a key line to the Mediterranean port of Ceyhan in Turkey. It's all part of an interim revenue-sharing deal, reached between Baghdad and semi-autonomous Iraqi Kurdistan last month, following years of tensions that have undermined the national fight against IS forces. The agreement includes the shipment 300,000 b/d of oil from Kirkuk and 250,000 b/d from Kurdistan.
"The one bright spot has been the oil sector, which has so far seen no disruption to production as a consequence of the conflict," HSBC Global Research said in a note early Monday.
"More immediately, Iraq must brace for the impact of the oil price slump which will deal a heavy blow to public finances and Iraq's oil-dependent external accounts".