Iraq PM demands fair OPEC share as $400B reconstruction looms

Iraq's push for a larger OPEC quota and deeper U.S. energy ties marks the most significant shift in Baghdad's oil strategy since the Iran war.

Iraq called for a fairer production quota within OPEC as Prime Minister Ali al-Zaidi sought U.S. energy investment to rebuild an economy battered by the Iran war and $400 billion in damage from the Islamic State conflict.

"Iraq is one of the founding members of OPEC and our right is to receive a fair share for Iraq," Zaidi told reporters at the White House on Tuesday during a bilateral meeting with U.S. President Donald Trump. The prime minister was responding to questions about whether Baghdad was considering leaving the oil producer group.

Iraq holds some of the world's largest crude reserves but has struggled to boost output due to OPEC+ production limits, infrastructure bottlenecks, and years of conflict. The Iran war further hammered crude output and state finances, pushing Baghdad to diversify international partnerships. Zaidi's cabinet has approved agreements with U.S.-based HKN Energy to develop the Himreen oilfield and authorized the Electricity Ministry to finalize a cooperation deal with General Electric.

The push to attract American energy majors — including Chevron, which entered exclusive talks for the giant West Qurna-2 oilfield after Baghdad moved to replace Russia's Lukoil as operator — represents one of the most explicit attempts in years to shift Iraq's energy sector away from Chinese, Russian and European dominance. Zaidi said the government plans to significantly increase oil production within three years, a goal that will require billions in foreign investment and a resolution of tensions with OPEC over quota limits.

Rebuilding Through U.S. Investment

Zaidi, a multimillionaire who took office in May, has made energy the centerpiece of his Washington visit, which runs from July 13 to July 18. His government has directed the Ministries of Oil, Electricity and Communications to give priority to American companies in energy, telecommunications, technology and development. In early June, the Iraqi cabinet instructed state-run Basra Oil Company to exempt U.S. energy firms from certain regulatory requirements related to preliminary agreements, according to an official document seen by Reuters.

"The recent decisions regarding Chevron, U.S. operators in the Kurdistan region, and other U.S. energy projects reflect a deliberate policy shift," said Mohammed Abbas, a former manager at Basra Oil Company who now works as an energy consultant. "Zaidi is using Iraq's energy sector to strengthen ties with Washington and to reverse a perception among some U.S. energy majors that Iraq is a challenging environment for large-scale investment."

Four Iraqi oil officials familiar with the talks said the outreach to U.S. companies — including Chevron, ExxonMobil and HKN — underscored Baghdad's broader effort to deepen economic cooperation with the United States. Security around key oil installations has been reinforced since the Iran conflict, with additional measures aimed at reassuring foreign operators, Iraqi officials said.

OPEC Constraints vs. Production Ambitions

The tension between Iraq's production ambitions and OPEC+ quota limits remains a central challenge. Though security has improved markedly since the defeat of Islamic State about a decade ago, periodic drone attacks and regional tensions continue to pose risks to energy infrastructure. The Iran war was a turning point that highlighted the risks of overreliance on any single regional partner, said Ahmed Younis, a Baghdad-based political analyst.

Zaidi highlighted the enormous costs of past conflicts, noting that damage from the Islamic State insurgency exceeded $400 billion and that some Iraqis still live in destroyed homes and camps. "I have a plan to return them to their homes, and that is why I want a fair share for Iraq in OPEC," he said.

The last time Iraq publicly challenged its OPEC quota was in 2023, when it pushed for a higher baseline after years of underproduction due to conflict and underinvestment. That dispute was resolved with a modest adjustment, but the current push comes at a time when OPEC+ is already grappling with demand growth forecasts that the group lowered further for 2026. Any reallocation of quotas within the group could reshape global supply dynamics, particularly if Iraq follows through on its three-year production expansion plan.

This article is for informational purposes only and does not constitute investment advice.