Iraq’s collapsed economy is becoming a threat to OPEC, Bloomberg report says

Iraq’s collapsed economy is becoming a threat to OPEC, Bloomberg report says

Shafaq News / Iraq's collapsed economy could turn into a threat to OPEC, which is struggling to maintain oil prices, as some Iraqis want the government to put them first by pumping more oil.

A report by Bloomberg said that if an important partner like Iraq violates the agreement, it is certain that lesser countries will follow suit.

The report indicated that Iraq, the third-largest oil exporter in the world, is facing an economic collapse after COVID-19 led to a decline in global energy demand and lower prices, causing a financial that the government is unable to pay the salaries.

As by the report, this created a dilemma for Iraqi Oil Minister, Ihsan Abdul-Jabbar, who is now caught between the demands of the ongoing angry protests and the pledges made to OPEC allies.

The American Agency's report highlighted the Iraqi paradox. Reducing exports, according to the report, carries huge economic and political costs for Iraq, while the failure to adhere to OPEC+ agreement might cause a decline in prices, which will, consequently, has downsides on Iraq's financial income.

As one of the five founding members of the Organization of Petroleum Exporting Countries (OPEC), it is unlikely that Iraq would violate the agreement. However, Saudi Arabia, which actively participated in setting the agreement to reduce production, will retaliate by increasing production and pushing oil prices further down, according to the aforementioned report.

The report quotes a person familiar with the matter as saying that Iraqi officials might instead exert pressure on the Saudis to obtain financial aid if crude oil prices remained below the threshold of 45$ a barrel in the first half of 2021.

Oil prices in global markets have been slightly fluctuating recently but improved significantly compared to the early months of the COVID-19 pandemic. The price of a barrel currently ranges between 42 and 45 dollars compared to less than 20 dollars last April.

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