DUBAI/BAGHDAD/LONDON: A debate within Iraq over whether it should ask to be exempt from OPEC+ oil supply cuts has resurfaced as low prices squeeze its finances, challenging a government struggling to tackle the destruction of years of war and rampant corruption.
OPEC’s second-biggest producer, Iraq has failed in the past to fully comply with OPEC+ oil output reductions, pumping above its production targets since the pact was first signed in 2016 between OPEC and its allies led by Russia.
“Iraq always believed they were not properly treated in December 2016 when they were not exempted. As the economy continues to reel from low prices this issue keeps resurfacing,” said an OPEC source.
Iraq’s economy and oil sector were battered by years of wars, sanctions and a stubborn Islamist insurgency triggered by the US invasion. Baghdad complained it had struggled to revive its stagnating oil industry, at a time where other OPEC members benefited and boosted their market share.
Iraq relies on oil to fund 97% of its state budget. Iraqi Finance Minister Ali Allawi told parliament on Wednesday that reforming Iraq’s economy would take five years of work and that state debt amounted to 80-90% of national product, while foreign debt was at $133 billion.
From May 1, the Organization of the Petroleum Exporting Countries and allies, a grouping known as OPEC+, made a record cut of 9.7 million bpd, or 10% of global output, after the coronaries destroyed a third of world demand. From Aug. 1, the cut tapered to 7.7 million bpd until December.
Iraqi politicians have criticized the pact which was signed by the previous caretaker government under which Baghdad had committed to a big cut in its output.
With oil prices currently trading at around $40 a barrel, opposition to the oil cuts is rising behind closed doors and talks of reviving old calls to review the size of the reductions have resurfaced, Iraq and OPEC sources told Reuters.
A senior Iraqi official with knowledge of the talks said there were differing views between the oil ministry and the prime minister’s office over whether to fully comply with the cuts or ask for an exemption for next year.
The oil ministry wants to ask for an exemption, the official, who declined to be identified, said, while officials in the prime minister’s office insist on compliance.
The disagreement revolves around Iraq’s current financial issues, the official added.
In May and June, Iraq had agreed to reduce its crude output by just over 1 million barrel per day, which would then ease to 849,000 bpd from July until end of the year.
Iraq has continued as a member of the deal but has overproduced above its quota.
But now Iraq needs to fully comply with the agreed output targets and even compensate for its previous overproduction in May-July by cutting deeper for the following months.
“There is strong opposition ... for their (Iraq’s) continued participation in the supply cuts,” the OPEC source said, adding that there has been unofficial talk about Baghdad’s need to seek an exemption from the oil cuts in 2021 but it was not clear whether Iraq would actually take that step or not.
In August, Iraq has reached its highest compliance in recent years but it has said it may need to extend the compensation period by two months.
Current Prime Minister Mustafa Al-Kadhimi took office in May, becoming the third Iraqi head of government in a chaotic 10-week period that followed months of deadly protests in the country, which has been exhausted by decades of sanctions, war, corruption and economic challenges.
Iraq’s oil ministry spokesman said last week that Baghdad remained fully committed to the OPEC+ oil supply cut agreement, denying a media report that it was seeking an exemption from the reduction pact during the first quarter of 2021.
In June, Iraq has said it asked OPEC to take into consideration the members’ economic situation in sharing the burden of future oil cuts.
The World Bank estimates Iraq’s economy will shrink 9.7% in 2020 on back of lower oil prices and coronavirus, compared to 4.4% growth in 2019.
With a battered economy, Iraq debates its contribution to OPEC+ oil cuts
https://arab.news/8gygc
With a battered economy, Iraq debates its contribution to OPEC+ oil cuts
- Iraq’s economy and oil sector were battered by years of wars, sanctions and a stubborn Islamist insurgency triggered by the US invasion
- In May and June, Iraq had agreed to reduce its crude output by just over 1 million barrel per day, which would then ease to 849,000 bpd from July until end of the year.
Qatar, Uruguay sign investment protection and tax treaties to deepen economic ties
RIYADH: Qatar and Uruguay signed two economic agreements aimed at strengthening investment flows and eliminating double taxation as Doha moves to expand its network of international trade partners.
The deals were concluded on the sidelines of the Doha Forum 2025, the Qatar News Agency reported.
The first pact, an agreement on the promotion and mutual protection of investments, was signed by Qatar’s Minister of Commerce and Industry, Sheikh Faisal bin Thani bin Faisal Al-Thani, and Uruguay’s Minister of Foreign Affairs, Mario Lubetkin.
The agreements come as part of efforts to establish a modern legal framework that eases two-way investments and strengthens investor confidence. They ensure fair treatment for investors, protect them from non-commercial risks, allow free movement of funds, and adopt global best practices for dispute resolution.
“This agreement is an important step toward expanding the horizons of economic and commercial cooperation between the two countries and opening new avenues for mutual investments, especially in vital sectors and services,” QNA reported.
In a parallel move, the two countries also signed an agreement to eliminate double taxation on income and prevent tax evasion and avoidance. Qatar’s Minister of Finance, Ali bin Ahmed Al-Kuwari, and Lubetkin signed the document.
Speaking at the signing ceremony, Al-Kuwari emphasized the importance of the tax agreement, stating: “It will contribute to supporting international transparency standards through the exchange of documented financial information, alongside strengthening bilateral economic relations between the two countries.”
The tax treaty aims to remove all forms of double taxation, prevent tax evasion, and ensure fairness and equality in the treatment of individuals. It is also expected to bolster commercial cooperation and increase investment opportunities for both governments and private entities.
The agreement is expected to support broader economic and trade cooperation between the two countries and create additional opportunities for mutual investment, particularly in key sectors and services. Qatar said it hopes the deal will further strengthen bilateral ties and serve the shared interests of both nations.
Following their signing, both agreements will enter into force after the completion of ratification procedures according to the domestic laws of each country.
The signings were preceded by a meeting between Al-Thani and Lubetkin, where they reviewed cooperation in commercial, investment, and industrial fields and discussed ways to enhance and develop these relations further.
