According to a recent economic report published by Oil Price and cited by Energy Press, the future of global oil prices is heavily dependent on Iraq's compliance with its production quotas under the OPEC+ agreement. As the group seeks to gradually restore production levels after a historic cut of 4.15 million barrels per day in 2023-2024, Iraq remains at the forefront of the pressure as the most over-quota country.
Iraq at the center of the OPEC+ equation
At the September meeting, OPEC+ agreed to a modest increase of 137,000 bpd starting in October, compared to larger increases in previous months. The group's ministers are expected to meet on October 5 via a virtual conference call to decide on November's additions, with hints from some members that the pace of production increases could be accelerated through three monthly payments of 500,000 barrels per day, which could raise fears of a return of oversupply and lower prices.
However, the most likely scenario, according to observers, is to stick to the current pace, which highlights Baghdad's commitment to offsetting plans. The Iraqi government has pledged to cut an additional 130,000 barrels per day between August 2025 and January 2026, gradually dropping to 122,000 barrels from June 2026. According to Standard Chartered analysts, Iraq's cut alone could equal almost the entire increase added by other members, making Baghdad the most sensitive factor in adjusting the balance between supply and demand.
In contrast, Kazakhstan has opted to postpone its big cut to mid-2026, increasing its reduction from 35,000 barrels in December to 650,000 barrels in June of the same year.
Kurdistan's Dilemma and Oil Export
The equation is further complicated by the possible resumption of oil exports from the Kurdistan Region of Iraq after a months-long halt, which could put Baghdad to a new test in terms of fulfilling its commitments to OPEC+.
The return of UN sanctions on Iran
At the same time, international sanctions against Iran have returned to cast a shadow over the market. The United Nations reinstated six previous resolutions against Tehran after the trigger mechanism was activated by France, Britain and Germany, in a move seen as a de facto termination of the 2015 nuclear deal. The sanctions include asset freezes, a ban on the export of conventional arms to Iran, and tighter controls on suspected Iranian vessels.
According to Kpler data, Iran is currently exporting around 1.5 million barrels per day, well below pre-sanctions levels (2.3 million barrels), but three times higher than at the end of former US President Donald Trump's term. Energy experts have ruled out that the new UN sanctions will have a major impact on Iran's exports, arguing that the informal networks of trade and the severity of previous US sanctions make the impact on the Iranian economy "limited".
Europe and the Gas File
On the European continent, gas inventories are still rising despite the cold weather and increased demand, reaching 96.22 billion cubic meters last week, equivalent to 82.3% of total storage capacity. The gas price ranged between €31 and €33 per megawatt hour, with trading stabilizing at €31.01 on Thursday.
Conclusion
The global energy market is at a critical juncture. Iraq's adherence to production quotas is the cornerstone of price stability, while the resumption of Kurdistan's exports puts pressure on Baghdad. At the same time, Iran is again facing international sanctions that could increase geopolitical tensions, even if they do not have an immediate impact on the volume of its oil exports. Europe is busy securing its gas needs for the winter, adding another dimension to the international energy equation.
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