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Baghdad Urges OPEC to Raise Iraq's Production Quota

A handout picture released by Iraq's Prime Minister's Press Office on January 2, 2025, shows a partial view of the oil refinery of Baiji north of Baghdad, during the inauguration ceremony of the fourth and fifth units. (Iraq's Prime Minister's Press Office / AFP)
A handout picture released by Iraq's Prime Minister's Press Office on January 2, 2025, shows a partial view of the oil refinery of Baiji north of Baghdad, during the inauguration ceremony of the fourth and fifth units. (Iraq's Prime Minister's Press Office / AFP)
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Baghdad Urges OPEC to Raise Iraq's Production Quota

A handout picture released by Iraq's Prime Minister's Press Office on January 2, 2025, shows a partial view of the oil refinery of Baiji north of Baghdad, during the inauguration ceremony of the fourth and fifth units. (Iraq's Prime Minister's Press Office / AFP)
A handout picture released by Iraq's Prime Minister's Press Office on January 2, 2025, shows a partial view of the oil refinery of Baiji north of Baghdad, during the inauguration ceremony of the fourth and fifth units. (Iraq's Prime Minister's Press Office / AFP)

Baghdad has urged OPEC to increase Iraq's oil production quota, taking into account the damage done to its industry by its history of conflicts and the recent regional war, its oil ministry said Thursday.

Like other oil producers, Iraq, a founding member of OPEC, was greatly affected by the Middle East war, as it is hugely dependent on oil exports, which make up about 90 percent of its budget revenues.

Iraq's oil ministry said that reassessing production baselines was important "to ensure they are aligned with the sustainable production capacities of member countries", and with respect to "Iraq's unique security and economic circumstances".

OPEC has "responded by launching a process to reassess" its member states' capacities, the ministry said.

Following reports of a possible Iraqi exit from OPEC, oil ministry spokesperson Salim al-Rikabi told AFP that Iraq "has no intention of withdrawing from the organization and remains committed to its mechanisms".

But he added that the cartel "has to raise Iraq's production quota. Otherwise, a decision will have to be made about whether to stay or leave the organization".

Iraq has started increasing its production "in line with its capacities and needs", he said.

The ministry said that "reports suggesting that Iraq is considering ending its membership in OPEC do not reflect" the government's position.

Iraq's ministry said that any change would be decided within OPEC's existing framework, but noted there was a "high level of understanding" among members regarding Iraq's situation after decades of wars, sanctions, and recent attacks on the sector during the Middle East War.

All of these challenges will be considered to "ensure that Iraqi oil production reaches a fair level".

The Middle East war and Iran's blockade of the Strait of Hormuz choked off shipments and prompted production cuts in key oil-producing countries including Iraq, shaking world energy markets.

During the conflict, several Iraqi oil fields were struck by drones mostly launched by pro-Iran armed groups.

Before the war, Iraq produced around four million barrels per day (bpd), and exported an average of 3.5 million bpd, mostly via Hormuz.

After the recent deal between Washington and Tehran to end the fighting, Iraq now hopes to return within two months to its previous production levels.

A former oil ministry official, who requested anonymity, warned against Iraq's exit from OPEC.

A "withdrawal would not serve the interests of Iraq", which is exclusively dependent on the oil sector, he said.

"I don't think that Iraq has really the incentives to leave OPEC," said Jorge Leon, an analyst at Rystad Energy.

Instead, he added, Iraq might be trying to apply pressure to "the capacity review exercise that the group is currently doing", which will serve as the basis for the 2027 quota.

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Business

EBRD Cuts Growth Outlook Again as Iraq, Lebanon, Ukraine Hit by War Pressures

FILE - A worker collects engine oil as he works at a degassing station in Zubair oil field, near Basra, Iraq, Saturday, March 28, 2026. (AP Photo/Leo Correa, File)
FILE - A worker collects engine oil as he works at a degassing station in Zubair oil field, near Basra, Iraq, Saturday, March 28, 2026. (AP Photo/Leo Correa, File)
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EBRD Cuts Growth Outlook Again as Iraq, Lebanon, Ukraine Hit by War Pressures

FILE - A worker collects engine oil as he works at a degassing station in Zubair oil field, near Basra, Iraq, Saturday, March 28, 2026. (AP Photo/Leo Correa, File)
FILE - A worker collects engine oil as he works at a degassing station in Zubair oil field, near Basra, Iraq, Saturday, March 28, 2026. (AP Photo/Leo Correa, File)

Growth is slowing across a range of emerging market nations, with economies in Iraq, Lebanon and Ukraine hamstrung by the effects of war, the European Bank for Reconstruction and Development said on Thursday.

High energy prices, rising borrowing costs and issues ranging from drought in Europe to the ongoing closure of the Strait of Hormuz are combining to depress economic growth, the EBRD regional economic outlook found.

Across the 41 economies it covers, the EBRD expects growth of 2.5% this year, 0.6 ⁠percentage points below ⁠its June forecast and its second consecutive downgrade.

"What's a cause for concern is that there are multiple pressure points, from diesel to cost of wheat to cost of borrowing," EBRD chief economist Beata Javorcik said, according to Reuters. "Pressures are building up, and there are considerable downside risks to our forecast."

The sharpest downgrades were for Iraq and Lebanon. The EBRD expects Iraq's economy to contract ⁠by 12% this year after the closure of the Strait of Hormuz curbed oil exports, while Lebanon is expected to contract 5% as conflict with Israel weighs on economic activity.

The EBRD also lowered its forecasts for Ukraine, owing to intensifying Russian attacks, and for Türkiye, where it said persistent inflation pressures were forcing tighter financing conditions.

Price pressures, meanwhile, were less intense than the EBRD had feared. Average inflation in EBRD regions stabilized at around 6%, the report found, and energy accounted for roughly a quarter of the headline figure.

But wheat prices globally are ⁠up roughly ⁠30% since February as Black Sea attacks cut Ukrainian exports to the lowest level since April 2022, Javorcik said.

This could cut Ukrainian wheat, seed oil and metals exports by $5.5 billion this year, equivalent to 2.5% of GDP, as low water levels on the Danube and Russian attacks on rail links limit alternative export routes.

"This of course has big implications for economic activity in Ukraine," Javorcik said, adding that, if farmers cannot export their crops, it could harm their ability to buy fertilizer for the next planting season.

Elevated wheat prices threaten food-importing economies, particularly countries such as Egypt that heavily subsidize bread and grain products.

Russia and Ukraine combined account for roughly a quarter of global wheat exports.

Business

As 5% Treasury Yields Lose Shock Value, Investors Start Worrying about 6%

US Department of the Treasury (Reuters)
US Department of the Treasury (Reuters)
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As 5% Treasury Yields Lose Shock Value, Investors Start Worrying about 6%

US Department of the Treasury (Reuters)
US Department of the Treasury (Reuters)

For years, 5% on the benchmark US 10-year Treasury yield was viewed as the point at which global financial markets would start hitting turbulence. That threshold is beginning to look less like a ceiling and more like a waypoint.

This month's breach of 5% - something that has happened only briefly in recent decades - has forced investors to contemplate an unsettling question: What if 6% is the new number that should be keeping them awake at night? Reuters reported.

The latest move above 5% has not lasted long enough yet to properly test that theory. But it has always been a psychological marker rather than an automatic tripwire, according to BlueBay Asset Management's head of market strategy, Mike Bell.

"People think of it as if there's a magic number for Treasury yields at which it becomes a problem, (but) it's a relative number, not an absolute number," Bell explained.

What matters is how Treasury yields compare with other key investment metrics, particularly the earnings yield on stocks. Bell says that relationship ‌is now approaching ‌an inflection point, potentially setting the stage for an equity selloff.

History offers some guidance. MSCI's main world ‌stocks ⁠index halved in value ⁠the last time the 10-year Treasury yield broke 5%, which was just before the global financial crash. It suffered a similar slump less than a decade earlier when a near 6.8% spike helped pop the dotcom bubble.

JP Morgan's analysts say one of the reasons why the pain-point might now be above 5% again is a "key structural shift" in the global economy, with AI, healthcare and services playing a bigger role. Many of those firms are spending and expanding, regardless of the level of borrowing costs.

That means "the traditional interest-rate channel looks materially less binding" and the "breaking threshold" of stock markets may be "meaningfully higher, potentially in the 5.5%-6.0% range", JP Morgan said, referencing the views of some of the major investors at one of its most recent conferences.

PROFOUND REPRICING

In ⁠the $29-trillion Treasury market, which anchors pricing for virtually all financial assets, a shift from 5% to 6% ‌would represent a profound adjustment in the global cost of capital.

A 6% Treasury yield ‌would imply either significantly higher inflation expectations, growing concerns about US fiscal sustainability, a conviction that interest rates will remain elevated for years - or a mix of ‌all three.

Federal Reserve policymaker Austan Goolsbee said this week that he didn't know whether markets would react differently to a lengthier period of ‌5% yields than they had in the past.

Paul Jackson, Invesco global head of asset allocation research, said investors focus on Treasury yields for a simple reason: Treasuries represent the world's risk-free benchmark and at above 5%, investors can lock in the highest returns on US bonds since 2007.

Jackson's own calculations show world stocks start to drop when the 10-year yield has traded at an average of 4.72% for 12 months and then rises.

That tipping point remains some way off ‌for now - the 12-month average is currently around 4.34% - but Jackson said he was already dialling back on stocks and switching some money into government bonds to cash in on the juicy yields.

"If Treasury ⁠yields keep rising then there ⁠is a risk that the stock market is lower in 12 months' time," he said.

EMERGING QUESTIONS

Emerging markets, which have enjoyed something of a hot streak in recent years, are often among the first casualties when US yields surge.

Higher Treasury returns tend to strengthen the dollar and make dollar-denominated assets more attractive. That sucks capital away from EM economies and can tip hard-up countries into crisis if the cost of servicing their dollar-denominated debt spirals.

Data on investment flows shows last week saw the biggest exodus from EM bond funds in months, with billions also withdrawn from equity funds. Issuance of emerging-market sovereign debt has also been notably lighter than usual this month.

"It's not an optimal picture for EM," said Alison Shimada, Head of Total Emerging Markets Equity, Allspring Global Investments, although she stressed that for now nothing was going "horribly wrong" and therefore remained "constructive".

Perhaps the biggest risk is psychological.

Once investors start asking whether 6% is attainable, the debate shifts beyond a temporary spike in yields. It becomes a broader reckoning with the possibility that the era of abundant liquidity and ultra-cheap money has ended, forcing global asset prices to adapt to a permanently higher cost of capital.

Premier Miton CIO Neil Birrell said while stock markets were showing no sign of collapsing right now, that might be because investors weren't yet plugging in 5%-plus yields into their longer-term profit forecasting models.

"The markets look fine until everyone re-runs their valuation models," Birrell said. "Ultimately, the numbers are the numbers and they've got to come through."

Business

East Pipes Signs $12.27 Million Contract with Aramco

One of the manufacturing facilities of Eastern Pipes Company in Saudi Arabia. (Company photo)
One of the manufacturing facilities of Eastern Pipes Company in Saudi Arabia. (Company photo)
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East Pipes Signs $12.27 Million Contract with Aramco

One of the manufacturing facilities of Eastern Pipes Company in Saudi Arabia. (Company photo)
One of the manufacturing facilities of Eastern Pipes Company in Saudi Arabia. (Company photo)

Saudi Arabia's East Pipes Integrated Company for Industry has signed a new five-month contract with Saudi Aramco to manufacture and supply steel pipes, with the total value exceeding 46 million riyals ($12.27 million), including value-added tax, the company said on Thursday.

The contract was formally signed on Tuesday, Sept. 22, 2026, after the contract award procedures were completed on the same day.

The company said the contract is expected to have a positive financial impact, which will be reflected in its financial results for the fourth quarter of fiscal year 2026-2027.

The company said there were no related parties involved in the transaction and that the contract was concluded under customary commercial terms and conditions, in line with transparency and corporate governance requirements.