- Iraq (Federal Iraq and Kurdistan Regional Government) was the second-highest crude oil producer in OPEC after Saudi Arabia and the seventh-highest total petroleum liquids producer in the world in 2024.1 It held 145 billion barrels of proved crude oil reserves, representing 17% of proved reserves in the Middle East and 9% of global reserves in 2023.2 Most of Iraq’s major known fields—all of which are located onshore—are producing or are in development.3 Most of Iraq’s crude oil reserves are located in the southern Basra region, the Diyala region east of Baghdad, and the northeastern Kirkuk region.4
- Because of frequent government gridlock, Federal Iraq often faces delays in forming key legislation, passing annual budgets, and financing major energy projects by the government and foreign investors. A new government under the leadership of Mohammed Shia al-Sudani was formed in late 2022, which approved funds for several infrastructure projects that would have budgets in place between 2023 and 2025. However, the country still lacks sufficient energy infrastructure. The next parliamentary elections are slated for November 2025.5
- Crude oil export revenues account for a large part of Iraq’s economy. In 2023, oil export revenue (mostly from crude oil) accounted for an estimated 90% of Iraq’s total government revenues, according to the International Monetary Fund (IMF).6 Iraq’s crude oil export revenues fell by an estimated 22% from 2022 to 2023,7 driven by lower crude oil prices and lower production following OPEC+ cuts and supply disruptions in northern Iraq. Lower global oil prices offset marginally higher crude oil production in Iraq in 2024 (following a partial recovery in Kurdistan Regional Government production and higher refining runs), resulting in slightly lower crude oil export revenues for Iraq.8
- Iraq consumed an estimated 2.9 quadrillion British thermal units of total primary energy in 2023, making it the fourth-highest energy consumer in the Middle East behind Iran, Saudi Arabia, and the United Arab Emirates.9 Natural gas and oil accounted for almost all of Iraq’s total primary energy consumption; hydropower and solar energy contributed marginally (Figure 1). Iraq will primarily use oil to meet energy demand until it develops more natural gas processing capacity and pipeline infrastructure.
Relationship between Federal Iraq and the Kurdistan Regional Government
- Federal Iraq refers to the political entity governed by the central government of Iraq in Baghdad. The Kurdistan Regional Government (KRG), the official ruling body of the semi-autonomous region in northern Iraq (which is predominantly Kurdish), has been involved in soverignty disputes with the central government for three decades.
- Türkiye stopped crude oil flows through the Iraq-to-Türkiye (ITP) pipeline in March 2023 when an international arbitration court ruled in favor of Federal Iraq. The court ruling restricted Türkiye from accepting crude oil directly from the KRG without the permission of Federal Iraq and ordered Türkiye to pay Federal Iraq for financial damages for previous KRG exports through the ITP.10 Türkiye agreed to comply with the arbitration and to accept only crude oil sold on behalf of Federal Iraq. KRG crude oil production fell from about 435,000 barrels per day (b/d) in 2022 to nearly 240,000 b/d in 2023 because of the pipeline closure and limited outlets to sell crude oil production locally to refiners. Although most of the production in northern Iraq was shut in or placed into storage immediately after the ITP pipeline stopped operating, the KRG fields increased production from slightly more than 100,000 b/d in April 2023 to about 300,000 b/d by March 2024. Production averaged close to 300,000 b/d annually in 2024. Northern refineries, including numerous small topping plants,11 increased crude oil purchases at steep discounts, and reportedly, some oil traders sent crude oil to Türkiye and Iran via truck.12
- Federal Iraq’s current budget stipulates that the KRG release 400,000 b/d of crude oil to Federal Iraq in return for a portion of the federal budget, but the ITP pipeline closure has hindered the KRG’s ability to produce at that level. In effort to re-open the pipeline, Iraq’s parliament passed a budget amendment in February 2025 that requires Federal Iraq to pay independent oil companies (IOCs) operating in the KRG $16/b for crude oil sold through the pipeline, which is more than double the $6/b from the budget law.13, 14 (Please see endnote for more details). The KRG, Federal Iraq, and the IOCs are at a standstill with the negotiations as of June 2025. Any signficant delay in the resolution to these negotiations likely will affect future investment, the ability to raise production in the KRG, and the potential reopening of the ITP.
Petroleum and Other Liquids
- Iraq, one of the members of the OPEC+ agreement, raised its crude oil output (excluding condensates) in 2024 by nearly 100,000 barrels per day (b/d), to an average of 4.4 million b/d.15 Iraq, along with other OPEC+ members, made several voluntary crude oil production cuts since the end of 2022.16 The central government in Baghdad produced about 4.1 million b/d, and the KRG supplied nearly 300,000 b/d of crude oil from the northern fields it operates.17 Iraq (including the KRG) produced, on average, 4.5 million b/d of total petroleum liquids (crude oil, condensates, and natural gas liquids) in 2024 (Figure 3).18
- In December 2024, eight OPEC+ members, including Iraq, announced they would phase out voluntary crude oil production cuts through the end of 2026. However, Iraq produced more crude oil than its allotted target of 4.0 million b/d in 2024 and agreed to compensate for any this overproduction.19 If the ITP pipeline to Türkiye resumes operations in 2025, we expect Iraq’s production to rise.
- Iraq’s oil ministry plans to lift crude oil production capacity to 7 million b/d by 2029. In addition, it will target several upstream expansion projects, mostly in southern Iraq, to bolster the country’s output and offset some of the oil declines from large legacy fields (Table 2).20 Some of these projects are likely to face delays because of Iraq’s political struggles, regulatory challenges, delays in restoring and expanding export infrastructure in the country’s south, and the IOCs’ uncertainty about the investment climate.21
- Iraq’s oil production requires water injections to maintain reservoir pressure and to increase oil production. TotalEnergies intends to invest in a 7.5 million-b/d seawater conversion project as part of its energy agreement with the Iraqi government to bolster oil production from mature fields in southern Iraq. Iraq finalized its agreement with TotalEnergies in July 2023, and the first phase of the seawater conversion project is slated to come online in 2028, assuming no further project delays.22
- In August 2024, bp and the Iraqi government agreed to redevelop the Kirkuk region’s energy sector, including its large oil fields in northern Iraq. bp is slated to invest up to $25 billion over 25 years in further oil and natural gas development at four fields in the Kirkuk region (Table 2).23 Iraq and bp finalized the deal in February 2025, and Iraq’s government approved the contract in March 2025.24
- Iraq consumed nearly 1.1 million b/d of petroleum and other liquids in 2024.25 Domestic refineries meet most of Iraq’s petroleum product demand; however, Iraq imports some petroleum products, primarily gasoline.26 Iraq also uses crude oil and high sulfur fuel oil for electric power generation.27
- Iraq’s total operating refining capacity is approximately 1.3 million b/d.28 The Iraqi government plans to reduce petroleum product imports by rehabilitating the refining sector and building new refineries but has struggled in its efforts to attract the foreign investment needed in the downstream sector. Iraq’s refineries produce heavy fuel oil in excess of domestic needs and not enough gasoline and diesel to meet domestic demand.29
- Iraq has added 380,000 b/d of crude oil refining capacity since early 2023, including the 140,000 b/d-Karbala refinery. The South Refining Company also commissioned a fourth 70,000-b/d expansion unit at the Basra refinery at the end of 2023 and plans to retrofit the refinery to produce more middle distillates by 2026.30 Iraq repaired the damaged 150,000 b/d-crude oil distillation unit at the North Baiji refinery complex, which had been closed since 2013, and reopened the refinery in early 2024.31 Also, the North Refineries Company added 20,000 b/d to the Siniya refinery in 2024.32
- Several new refinery projects are planned, including capacity expansion and upgrades at existing refineries, to alleviate domestic product shortages, reduce government import costs for oil products, and eventually increase exports of refined products.33 Iraq signed a contract with China National Chemical Engineering Company in May 2024 to develop the largest of these projects, the 300,000-b/d Fao refinery. Iraq expects the first phase to come online in 2028.34
- In addition to the legal refineries in Iraq, many illegal topping plants exist, especially in the KRG region. These plants helped KRG crude oil production partially recover after the ITP pipeline closed in March 2023.35
| Field name | Operator or project investor | Additional capacity (thousands of barrels per day) | Announced start date | Notes |
|---|---|---|---|---|
| Majnoon | Basra Oil Company | 200 | mid-202436 | |
| Faihaa crude oil processing facility | China’s United Energy Group | 100 | April 2024 | Located on the border with Iran. Plans include expanding the Faihaa field capacity from about 80,000 barrels per day (b/d) to 130,000 b/d and installing a 100,000-b/d processing facility. The facility could also process oil from nearby fields.37 |
| Zubair Musharf expansion station | ENI | 200 | 2025 | Any future expansions will require more water injection38 |
| Ratawi | TotalEnergies | 110 (Phase 1)39 | 2025 | Field expansion is part of TotalEnergies’ $27 billion deal signed in September 2021 with Iraq. The agreement was finalized in July 2023. The planned expansion of field capacity is to 210,000 b/d. Production in 2024 averaged about 60,000 b/d.40 |
| West Qurna-1 | PetroChina, Basra Oil Company, Itochu, and Pertamina | 250 | 2028 | Iraq awarded a drilling contract to services firm Schlumberger. ExxonMobil sold its shares in the field to Basra Oil Company at the end of 2023. PetroChina is the new field operator. Current capacity is 550,000 b/d, and projected capacity is 800,000 b/d. Iraq targets a 200,000 b/d increase by the end of 2025.41 |
| Eridu | Lukoil, Inpex | 250 | 2028 | The pilot phase will include 30,000 b/d starting in 2027. The field’s peak production target is set for 250,000 b/d.42 |
| West Qurna-2 | Lukoil | 320 | 2030 | Capacity expansion includes the Yamama reservoir. Capacity was 480,000 b/d in late 2023, mostly from the Mishrif reservoir. A pilot project for the Yamama reservoir began in 2021 and was producing 20,000 b/d in November 2023. Projected capacity is 800,000 b/d.43 |
| Nasiriya | Dhi Qar Oil Company (DQOC) | 210 | TBA | Iraq is negotiating with Gazprom to further develop the Nasiriya field from 90,000 b/d to 300,000 b/d.44 |
| Kirkuk region (Kirkuk, Bai Hassan, Jambur, and Khabbaz field) | bp | 120 | TBA | Iraq and bp signed a final contract to invest in redeveloping four oil and natural gas fields in Kirkuk. Current capacity is 300,000 b/d, and bp intends to increase capacity to 420,000 b/d. 45 |
| Data source: Middle East Economic Survey, Iraq Oil Report, Rystad Energy, Reuters, Al Arabiya News, and company websites Note: TBA=to be announced, b/d=barrels per day |
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Figure 2. Maps of Iraq’s largest oil and natural gas fields in northern and southern Iraq
Source: U.S. Energy Information Administration, World Bank, and National Energy Technology Laboratory Global Oil and Gas Infrastructure database
