Iraq's oil output is poised to overtake that of its neighbour and perennial Opec rival Iran by the end of the year, according to the latest report by Opec.
Production in Iraq is steadily increasing as efforts of international oil companies are bearing fruit, while Iran is hampered by international sanctions that prevent investment in its moribund oil sector and undermine its crude exports.
Output from Iraq's wells rose 7 per cent to just above 3 million barrels per day (bpd) last month, according to the latest monthly report of the oil exporters' club. Production in Iran, meanwhile, declined to 3.2 million bpd.
Baghdad plans to boost its capacity to 3.4 million bpd by the end of the year and more than 4 million bpd by the end of next year.
Iran is struggling to maintain its output in the face of sanctions that hinder the flow of capital and technology into its oil sector, preventing maintenance work and the implementation of sophisticated production techniques that enhance oil recovery.
A fourth round of sanctions has reduced exports, as the United States and the European Union target the payments systems for Iranian crude and the insurance of tankers carrying exports from Iran. Iraq's production last exceeded that of its neighbour in 1988 in the aftermath of an eight-year war that saw both sides attack tankers carrying exports from the warring parties.
Opec meets next month to decide on its ceiling, after incorporating Iraq into the voluntary quota system last December, which it set at 30 million bpd.
Before the outbreak of hostilities in 1980, Iraq and Iran had traditionally produced an equal share under the Opec ceiling. The Iran-Iraq war, the first and second Iraq wars in 1991 and 2003, and successive rounds of sanctions, have rendered the quota issue irrelevant.
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What sanctions would be reimposed?
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- A targeted global asset freeze and travel ban on Iranian individuals and entities
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