Iraq's insistence that it should be exempt from a proposed deal to limit oil output may sound audacious coming from OPEC's second largest producer, but analysts say it's entirely possible that top exporter Saudi Arabia will give Baghdad a pass.
Iraqi Oil Minister Jabar Ali al-Luaibi dropped the bombshell on Sunday, doubling down after Iraq had already kicked up a fuss over how OPEC plans to set quotas when it meets next month in Vienna. He argued that his country can't cut production because it badly needs oil revenue to fight the Islamic State, which Iraqi forces are now fighting to dislodge from Mosul, Iraq's second-largest city and ISIS's last stronghold in Iraq.
Crude output from Iraq has risen steadily as OPEC members battle for market share amid a two-year oil price rout. Iraq pumped at 4.45 million barrels per day in September, according to secondary sources.
To be sure, Iraq has traditionally been exempt from OPEC quotas, on the grounds that its economy has labored beneath the weight of war in recent years and sanctions before that. Still, Iraq's call to be exempt has helped to send oil prices below $50 a barrel this week and overshadowed supportive comments from Iranian and Russian officials regarding efforts to secure cuts from non-OPEC producers.
Iraq is "absolutely" stuck between a rock and hard place, said Bilal Wahab, a fellow at the Washington Institute for Near East Policy. Its economic situation is so bad, it cannot afford to cut oil production, but it is also desperate for the relief that higher oil prices would likely bring.