Center for a New American Security

Iraq’s crude oil production has increased substantially this year despite sectarian violence, political infighting and modest recovery from years of war.

Increased oil production has contributed to a 20 percent rise in oil exports, bringing total exports to approximately 2.5 million barrels of oil a day, according to a report in The New York Times.  The increased production is owed largely to modest improvements in security as well as technical service contracts with experienced foreign oil companies. “The companies brought in modern seismic equipment and modern well recovery techniques to resuscitate old fields,” The New York Times reported. Baghdad claims that these production improvements will enable the country to produce an additional 400,000 barrels a day by 2013, a step on the road to an announced goal of producing 10 million barrels of oil a day by 2017.

Iraq’s resurgent oil sector is likely to have positive benefits for the country and the global oil market. On the one hand, increased oil production will provide Baghdad additional revenue to help the fledgling government strengthen its legitimacy. As The New York Times reported, “Oil provides more than 95 percent of the government’s revenues, has enabled the building of roads and the expansion of social services, and has greatly strengthened the Shiite-led government’s hand in this ethnically divided country.” Moreover, Iraq’s production increase comes as Libya’s oil production is nearing a full recovery. Last week, Libyan officials announced that oil production had reached 90 percent of pre-civil war levels, with the country producing 1.6 million barrels of petroleum a day. Taken together, Iraq’s and Libya’s oil recoveries could help offset the impact of Iranian oil sanctions that will come into full force beginning in July. This will provide the global oil market added volume to satisfy demand and insulate consumers from dramatic price spikes.