Iraq Quadrupling Oil Production, OPEC Fears Price Collapse
Iraq's latest oil field auctions, mostly involving partnerships with Russian and Chinese companies due to a dearth of U.S. companies even tendering, could bring total oil production to 12 million barrels per day.
Believe it or not, Iraq is rapidly emerging as a rival to Saudi Arabia.
This has OPEC horrified, since a cash-hungry Iraq threatens to sink their global price-fixing regime.
Deutsche Welle: Once Iraq more than quadruples its output capacity, OPEC will have to take steps to prevent Iraq from flooding the market, and force Baghdad to realign its supply policy with other members and stick to an output target. If not, the current level of supply and demand which OPEC has worked hard to achieve, which provides oil at a price it deems reasonable to producers and consumers - currently around $75 a barrel - will come under threat.
"This will certainly cause ructions within OPEC because Iraq has huge resources and we can only assume that the Iraqis are going to pump as much as possible because they need the money," Judith Kipper, the director of the Energy Security Group of the Council on Foreign Relations in Washington, told Deutsche Welle. "If they get to the predicted number of barrels produced per day, this is really going to be a real issue within OPEC."
Iraq's economic plans for reconstruction and development hinge on the success of developing their oil production capabilities and bringing on line oil production to at least pre war oil production levels and increasing those levels over time. And if they are successful in their endeavors, OPEC indeed is going to have to change the way they have been running their oil cartel, especially now that China is a principal player in Iraq's oil development. As the Chinese say, we live in interesting times.