Iraq is pressing OPEC to raise its production limits as the country struggles with a severe financial crisis triggered by the US-Iran conflict. The oil ministry warned that without increased quotas, Baghdad may reconsider its membership in the cartel. This marks a significant escalation in tensions between Iraq and the organization.

Iraq's oil revenues collapsed when the Iran war blocked shipping through the Strait of Hormuz, forcing the government to print money to cover public sector wages. The warning comes after the United Arab Emirates left OPEC in April and boosted exports to 4.05mn b/d. Iraq was previously OPEC's second-largest producer.

OPEC hired De Golyer and Mac Naughton to reassess member capacities for 2027 quota resets. Meanwhile, Chevron is negotiating to take over the West Qurna 2 field from Lukoil. Analyst Paul Horsnell suggests Iraq could secure higher allocations through proper channels rather than threats.

Iraq's potential exit would deal a major blow to OPEC's cohesion, especially given its status as a founding member. The cartel faces mounting pressure as members seek flexibility to capitalize on higher oil prices while managing domestic fiscal crises.