Iraq threatened to leave OPEC if it is not permitted to produce oil more freely, following the UAE’s formal departure from the group on May 1.
The threat marks a potential tipping point for an organization that has spent much of 2026 struggling to manage a global oil market upended by conflict.
Iraq is the world’s sixth-largest crude producer and has spent billions expanding output capacity it cannot fully deploy under existing OPEC production discipline.
Like the UAE before it, Iraq faces mounting fiscal pressure that sharpens the tension between cartel loyalty and national economic interest.
The UAE’s departure on May 1 was widely linked to a strategic calculation that maximizing production now, while oil assets still command value, outweighs the benefits of coordinated restraint.
Robert Yawger of Mizuho Securities USA warned that if Iraq follows the UAE out and producers begin racing to flood the market with unconstrained barrels, oil could fall below $50 a barrel.
Such a collapse would mirror the kind of price destruction last seen during COVID, a scenario that would rattle energy markets and government budgets across the producing world.
Brent crude has already retreated from a March peak above $115 to around $75, closer to pre-war levels, and further OPEC fragmentation would clearly add downward pressure.
Yawger assessed that OPEC was effectively obsolete during the four months of conflict, as many members were simply unable to move barrels at all during that period.
The United States stepped into that vacuum, assuming the role of global swing producer that OPEC had historically claimed as its own strategic function.
Saudi Arabia holds spare capacity of 2 million barrels or more, giving it a unilateral market lever, but deploying it aggressively to punish defectors risks accelerating the very price decline it seeks to prevent.
Remaining cartel members face the same fundamental dilemma: produce more to hold market share, or hold back to support prices while rivals take advantage.
The more structural read is that OPEC+’s role as swing producer has already been diminished by US output growth, and the Iran war has only accelerated that shift.
