Iraq Defies OPEC+ Quota — Pumping 4.3 Million Barrels a Day as Oil Tops $88

Iraq's State Oil Marketing Organisation (SOMO) confirmed this week that the country's crude oil production reached 4.34 million barrels per day (mb/d) in April 2025 — significantly above its OPEC+ agreed ceiling of 3.91 mb/d. The overproduction, which has been a persistent flashpoint within the cartel, is adding fresh strain to OPEC+'s coordinated output strategy and pushing Brent crude back toward the $88 per barrel threshold.

Saudi Arabia's energy ministry issued a pointed statement urging all OPEC+ members to "fully adhere to their pledged quotas," a clear reference to Iraq and Kazakhstan, both of which have repeatedly breached agreed limits. OPEC+ officials, speaking to Bloomberg on condition of anonymity, said the group's monitoring committee has requested Iraq submit a detailed compensation plan — equivalent shortfalls in production that Baghdad promises will bring cumulative output in line before year-end.

Iraq's oil minister, Hayyan Abdul Ghani, defended the overproduction by pointing to ramping new capacity at the West Qurna-2 field, operated by Lukoil, and the ongoing Basra Oil Terminal expansion, which increased throughput capacity by 800,000 b/d in late 2024. "We are investing billions in infrastructure," Abdul Ghani told the Financial Times. "Our production potential is real — the world needs this oil."

The economics for Baghdad are stark. Oil revenues account for approximately 92% of Iraqi government income. At current Brent prices above $87, every 100,000 barrels above quota generates roughly $8.7 million per day in additional state revenue. With Iraq's 2025 federal budget predicated on an $80 oil price assumption and a 3.5 mb/d reference production level, any shortfall would force painful cuts to public sector salaries and reconstruction spending.

US reaction has been muted compared to Washington's pressure on other producers. American energy companies — ExxonMobil, Chevron, and Schlumberger — hold significant stakes in Iraqi upstream operations and benefit directly from higher production volumes. The Biden administration had privately urged OPEC+ to maintain production discipline to prevent oil price spikes that could feed domestic inflation; the current posture balances those concerns against energy security interests.

The IEA's May 2025 Oil Market Report warned that if Iraq and Kazakhstan continue to overproduce, OPEC+'s effective capacity to manage global supply will be "materially diminished," potentially triggering a revisit of the full production cut architecture. Brent crude settled at $87.40 on Thursday, its highest close since October 2024, driven partly by Iraq's outperformance and partly by a tighter-than-expected US inventory draw confirmed by the EIA, which showed a 3.2 million barrel decline in crude stocks.

Traders on the CME Group's NYMEX exchange pushed WTI futures above $84 for the first time this year, with open interest rising 12% week-over-week as hedge funds rebuilt long positions. Goldman Sachs revised its Q3 Brent forecast upward to $91, citing "persistent OPEC+ compliance gaps and Mideast risk premium rebuilding."

For global consumers, higher oil prices translate into jet fuel surcharges, elevated diesel costs for freight carriers, and renewed inflationary pressure in food supply chains. The World Bank, in a note published this month, estimated that a sustained $10 increase in Brent prices adds approximately 0.3 percentage points to global inflation — a meaningful number as central banks in the US, EU, and UK attempt to finalize their rate-cutting cycles.

Iraq's next official OPEC+ compensation plan submission deadline is June 1, 2025. Whether Baghdad delivers credible numbers — or again promises cuts that fail to materialize — will be a critical test of the cartel's cohesion heading into the summer driving season.