Oil calls oil. This week, one of the countries with the largest crude oil reserves has announced the discovery of a deposit of more than 2,000 million barrels of oil in the East Baghdad oil basin, according to Iraqi agencies and KUNA, Kuwait’s official news agency. This is news that has resonated strongly in the global energy panorama, given the significant size of the field, whose crude reserves would be sufficient to supply the demand from Spain for about 4 years. The price of Brent crude oil, a reference in Europe, is trading this day in the area of $79 per barrel, showing some stability in the session.
According to the National Oil Company of Central Iraq (Midland Oil Company), this new reserve not only increases the country’s already vast proven reserves, but also reinforces its position as one of the world’s oil giants. “This discovery has strategic importance, as it strengthens our reserves and improves our production capabilities”declared Mohammed Yassin Hassan, general director of the company.
To measure the magnitude of this discovery, one could say that the discovery of East Baghdad could cover Spain’s oil demand for four yearsconsidering that Spanish annual consumption 1.3 million barrels per day. This data underlines the relevance of crude oil in a world that, despite its transition towards renewable energy sources, continues to depend largely on hydrocarbons.
Iraq, a leading member of the Organization of the Petroleum Exporting Countries (OPEC), already had more than 145 billion barrels in proven reserves before this discovery. These figures place the country among the nations with the largest crude oil resources in the world, a fundamental pillar for an economy that depends more than 90% on oil exports to generate income.
Daily crude oil production in Iraq is around 4 million barrels, a figure that places it as the second largest producer in OPEC, only behind Saudi Arabia, which produces around 9 million barrels per day. However, this capability has not been without challenges. The production cuts agreed by OPEC to stabilize global prices have also impacted Iraq. Despite this, the country continues to play a crucial role in global oil supply, standing out for its ability to adapt and maintain a constant flow of exports.
The new deposit discovered in East Baghdad has already demonstrated impressive potential with initial tests indicating a production capacity of up to 5,000 barrels per day. This initial performance confirms that it is not only a quantitative contribution to the country’s reserves, but also a qualitative boost for its oil industry. “The daily production from this well is an example of the positive impact this discovery will have on our long-term operations,” said Yassin Hassan.
The finding also reopens the debate on the strategic relevance of Iraq in the context of OPEC. With cuts in place, the question is how these new resources will be managed in a market where supply and demand are meticulously balanced. Although the objective is to maintain stable prices, competition between large producers never completely disappears. This oil discovery will do nothing other than reinforce Iraq’s claims to increase its production quota within the OPEC agreements.
Iraq and its dependence on oil
On the other hand, the Iraqi economy continues to face challenges derived from its excessive dependence on oil. The economy is expected to grow 4% in 2025 after having grown the same in 2024. However, Iraqi leaders need to maintain high economic growth to try to hold together a country that suffers from a deep division (between Shiites and Sunnis). When the economy is doing well, the differences seem smaller, so each barrel of extra oil pumped helps achieve that objective, which is essential to maintain political and social stability. Fluctuations in global prices and geopolitical tensions have proven to be determining factors in the country’s economic performance.. This new discovery, although hopeful, highlights the need to diversify an economy that falters when the oil market experiences declines.
The Midland Oil Company’s announcement also highlights the unexplored potential of the Iraqi subsoil. The East Baghdad field, located in a region that was already known for its oil wealth, continues to offer surprises that reinforce Iraq’s role as one of the main players on the global energy table. Furthermore, the technical success of this project reflects the high level of knowledge and experience accumulated by Iraqi professionals in this sector.
In a world where the energy transition is a recurring theme, oil discoveries like the one in East Baghdad underline the complexity of change. While renewable energy gains ground, oil remains essential to keeping modern economies running. The case of Iraq is proof that the balance between current demands and the promises of the future will not be easy to achieve.
From a global perspective, The 2 billion barrels discovered represent a small fraction of global oil consumptionwhich exceeds 90 million barrels per day. However, its impact on the Iraqi economy is significant, especially in terms of potential revenues and confidence in its ability to continue discovering and exploiting energy resources.
The history of oil in Iraq is, in essence, a story of contradictions: an inexhaustible source of wealth and, at the same time, a trap that limits its development in other sectors. This discovery in East Baghdad, while encouraging, underscores the need for long-term strategies that allow the country to diversify its economy and prepare for an uncertain energy future.
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