Iraq Oil And Gas Market: Market Size & Forecast 2026

Iraq's oil and gas sector forms the backbone of the national economy, with petroleum revenues historically accounting for roughly 90 percent of government income. The country produces approximately 4.3 to 4.5 million barrels of oil per day, making it the second-largest producer within OPEC, and maintains significant natural gas reserves alongside extensive crude oil infrastructure spanning the southern, northern, and central regions.

• •Proven oil reserves estimated at approximately 145 billion barrels, representing about 9 percent of global reserves
• •Daily oil production averages between 4.3 and 4.5 million barrels, primarily from super-giant fields in southern Iraq including Rumaila, Majnoon, West Qurna, and Zubair
• •Major natural gas resources remain largely undeveloped, with significant flaring occurring at production sites across the country

The market's expansion is primarily fueled by Iraq's continued efforts to increase production capacity and attract foreign investment through technical service contracts with international energy firms. Reconstruction of war-damaged infrastructure, upgrades to export terminals and pipeline networks, and government initiatives to reduce associated gas flaring are all contributing to capacity growth. Additionally, rising domestic energy demand and regional geopolitical dynamics continue to shape investment decisions and production strategies across the sector.

• •Government technical service contracts with international oil companies have driven production increases since 2003, with plans to expand capacity toward 6 million barrels per day
• •Infrastructure modernization efforts, including pipeline expansions and port upgrades, aim to enhance export capabilities from the Persian Gulf
• •Reduction of gas flaring and development of domestic gas processing facilities represent key growth opportunities aligned with environmental commitments

The market spans upstream exploration and production, midstream transportation and storage, and downstream refining and petrochemicals, with upstream activities representing the dominant segment. Geographically, southern Iraq hosts the majority of producing assets through fields operated by the Basra Oil Company, while the Kurdistan Region maintains its own developing oil sector with distinct regulatory frameworks. Northern fields operated by the North Oil Company and central region assets managed by the Midland Oil Company round out the geographic distribution of activities.

• •Upstream crude oil production accounts for the overwhelming majority of sector value, while downstream refining remains underdeveloped relative to production capacity
• •Southern Iraq, particularly the Basra region, concentrates the largest producing fields and export infrastructure through the Basra Oil Company
• •The Kurdistan Region operates a semi-autonomous oil sector with independent pipelines to Turkey, though this relationship with the federal government in Baghdad remains a point of ongoing negotiation

What are the recent trends and outlook?

Long-term market prospects depend on political stability, resolution of fiscal and contractual disputes between the federal government and international operators, and successful implementation of diversification policies aimed at reducing dependence on crude oil exports. The development of associated gas utilization projects, expansion of refining capacity to reduce diesel and gasoline imports, and potential growth in petrochemicals represent key diversification priorities. Regional energy transition trends and global decarbonization efforts may gradually reshape investment flows, though Iraq's low-production-cost oil reserves are expected to remain competitive for the foreseeable future.

• •Gas capture and utilization initiatives are gaining momentum as Iraq seeks to reduce flaring and redirect resources toward power generation and industrial development
• •Refining expansion projects, including upgrades at existing facilities and construction of new plants, aim to achieve self-sufficiency in refined products
• •International oil companies continue to evaluate new bidding rounds and field development opportunities, though fiscal terms and security considerations remain critical factors in investment decisions