Economy
Iraq could be the next to break ranks with OPEC, analyst says

Iraq could be the next to break ranks with OPEC, analyst says


Compliance across OPEC is in question amid conflicting interests regarding oil production cuts and an abrupt withdrawal announcement from Qatar.

While the tiny Gulf kingdom's departure is largely symbolic and unlikely to lead to further exits, a top energy analyst believes that if any country were to break ranks next, it would be Iraq.

"I think in terms of all the OPEC countries, to me the one that stands out over the last six to eight months is Iraq," Michael Cohen, head of energy markets research at Barclays bank, told CNBC's "Squawk Box Europe" on Tuesday.

 

"Iraq has been out of line with its target frequently... so if restrictions to cut were too stringent, Iraq might feel it in its best interest to no longer be a member of the organization," Cohen added.

As the 15-member OPEC's second-largest oil producer and still suffering from swathes of debilitated infrastructure and poverty after years of war and sanctions, Iraq has an incentive to keep its taps turned on. According to the International Energy Agency, more than 90 percent of Iraq's government revenue comes from oil.

In pointing to Iraq, Cohen cited the visits of Saudi oil minister Khalid al-Falih to Baghdad over the last two months, although he admitted he did not know the content of officials' conversations, which were not all made public.

"We're not privy to the nature of those conversations, but clearly there is a lot of concern in terms of keeping Iraq to what it says," Cohen said.

According to media reports, Al-Falih met with his Iraqi counterparts and the country's Prime Minister Adel Abdul-Mahdi to discuss increasing cooperation in the energy and electricity fields. The U.S. has been encouraging Saudi investment in Iraqi reconstruction as a measure to push back against neighboring Iran's heavy clout in the country.