Baghdad's great oil boom; The return of energy giants to Iraq

Source link: Baghdad's great oil boom; The return of energy giants to Iraq at a glance Western oil giants such as Chevron, BP and ConocoPhillips are paving the way for the development of Iraqi oil production up to 5.5 million barrels per day by 2030 by signing new agreements. By abandoning low-yielding service contracts and offering more profitable terms, the Baghdad government has managed to re-direct billions of dollars of international capital to the upstream sector […] Source site: Safir A

By signing new agreements, Western oil giants such as Chevron, BP and ConocoPhillips pave the way for the development of Iraqi oil production up to 5.5 million barrels per day by 2030.

By abandoning low-yielding service contracts and offering more profitable terms, the Baghdad government has managed to attract billions of dollars of international capital back to the upstream oil sector.

Iraq aims to achieve a production capacity of 6-10 million barrels per day to consolidate its position as the second largest producer in the region after Saudi Arabia.

Threats around the Strait of Hormuz and adherence to OPEC production quotas have focused Baghdad on activating alternative pipelines through Turkey and Syria.

Global oil companies including Chevron, BP and ConocoPhillips are preparing to increase their investments in Iraq. The Baghdad government plans to increase its daily oil production capacity to 5.5 million barrels by 2030 through these new contracts.

Despite the regional risks caused by tensions between the United States and Iran, Iraq has once again become the focus of international energy companies. The more attractive conditions of the country's contracts for foreign investors have increased the interest of major oil producers.

Before the recent developments, Iraq was producing approximately 4.5 million barrels of oil per day. Estimates show that with the arrival of new capital, the production capacity of this country can increase between 20 and 30 percent in the coming years. The Prime Minister of Iraq has even raised the possibility of achieving a daily production capacity of 8 to 10 million barrels after 2035, which, of course, is considered challenging considering the current conditions of investment and production infrastructure. Achieving the target of 6 million barrels per day would make Iraq the second largest oil producer in the Middle East after Saudi Arabia.

Three years ago, Total Energy expanded its activities in Iraq with a 27 billion dollar investment package including oil and natural gas projects. In this regard, BP signed a new contract last year and ConocoPhillips also joined this project. Also, Chevron has reached a preliminary agreement with the Baghdad government to take over oil assets previously owned by Russia's Lukoil, and the final agreement is expected to be signed in 2027. Mike Wirth, CEO of Chevron, emphasized that investment conditions in Iraq have become more attractive than in the past.

Transition from traditional models to profitable contracts

After 2003, Iraq offered service contracts with a fixed cost per barrel to foreign companies, which led to the withdrawal of some companies due to low returns and high risk. Now, new contracts have provided an opportunity to benefit from oil price fluctuations and to declare reserves on companies' balance sheets. This fundamental change in the terms of the contract is a decisive factor in attracting billions of dollars of reinvestment by major oil companies.

Geopolitical challenges and OPEC policies

Tensions in the Middle East and shipping security risks in the Strait of Hormuz have affected Iraq's oil exports. While Baghdad still relies on the export pipeline through Turkey to the Mediterranean as an alternative route, the plan to build a new pipeline through Syria is also on the agenda. In addition, there are ambiguities regarding how Iraq's production increase plans will be reconciled with the production quotas of the Organization of the Petroleum Exporting Countries (OPEC), which is still considered one of the main variables in the development of this industry.

Iraq's crude oil exports reached 2.57 million barrels per day in September 2026, recording the fourth consecutive month of growth. This figure shows an increase of 9%, equivalent to 218 thousand barrels per day, compared to August, 2.35 million barrels per day. This is the highest level of Iraqi sea exports since the beginning of recent tensions in the region.

Despite this monthly improvement, the volume of exports in September compared to the same period last year, 3.41 million barrels per day, still shows a decrease of 25%. In the shadow of the continuation of the transit crisis around the Strait of Hormuz, 44% of Iraq's oil shipments are registered with "unknown destination", which is expected to reveal more details of their final origins with the release of additional data in the coming months.

Iraq's crude oil exports experienced severe fluctuations in the first nine months of 2026. This trend, which started with strength and levels of 3.31 million barrels per day in January and 3.34 million barrels per day in February, fell to 540 thousand barrels per day following the closure of the Strait of Hormuz in March.

This downward trend reached 132,000 barrels and 98,000 barrels per day in April and May, respectively, which was the lowest level of export recorded. However, the gradual restoration of this trend began in June, and the monthly export volume increased to 515,000 barrels in June, 1.37 million barrels in July, 2.35 million barrels in August and 2.57 million barrels per day in September, respectively.

In total, Iraq's average crude oil export in the period from January to September 2026 has decreased by 52% compared to the same period in 2025, reaching 1.6 million barrels per day.