The Coming OPEC Wars…………..
“Iraq could raise oil production to 12 million barrels a day by 2016 to rival world's biggest producer. A surge from Iraq's oilfields will occupy OPEC crude producers in coming years as the recovering country's output challenges that of Saudi Arabia, observers said as the cartel held its latest meeting. Iraq has signed several contracts this month with foreign oil companies and said it could raise production to 12 million barrels a day by 2016 -- a level to rival Saudi Arabia, the world's biggest oil producer. Iraqi Oil Minister Hussein al-Shahristani insisted Iraq will have a strong market for this oil in the coming decades. "We expect the demand for oil to increase over the coming 20 years," he said at Tuesday's meeting. "There is definitely a need in the market for additional production and... there is no better place than Iraq to provide it." Delegates at Tuesday's talks said they had not yet broached the question of admitting Iraq into the group's quota system, focussing instead on economic threats that could weaken the recovery in the oil market. Kuwait and others have also insisted they are not concerned by Iraq's prospective rise. But analysts said Iraq's expansion would be weighing on members' minds in the medium term. "In a five-year perspective there could be a big issue for OPEC how to incorporate Iraq into the quota system, as Iraqi output is set to increase quite a lot," wrote Torbjorn Kjus, an Oslo-based analyst at DnB NOR Markets…..…..”
Current Iraqi crude stands at about 2.5 million barrels per day. In a long term sense Iraq in under producing in the sense that her current production capacity could expand greatly in the next few years. Once new investments are done and production raised to levels commensurate with Iraqi reserves, OPEC will have to reconfigure its production level and distribution.
The same can be said for Iran, which can also produce much more crude within a few years, provided the needed investments are made.
Some OPEC major members, the ones with large reserves, are already getting ready for that potential by working to raise production capacity.
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