Iraq has asked the leadership of OPEC to set its future production quotas on a significantly higher crude oil output baseline, Bloomberg has reported, citing unnamed sources with knowledge of the matter.

According to the sources, Baghdad wants its future quotas within the producer group to be calculated from a daily production baseline of 6 million barrels of crude. Baselines are the reference figures from which OPEC calculates each member's allowable output, so the level a country secures sets the ceiling on what it can formally pump under the group's quota system. For Iraq, the gap is wide: the requested baseline is substantially higher than the country's current output, which stood at roughly 3.37 million barrels per day as of August. Even so, the August average was markedly above July's, when Iraqi production averaged 2.77 million barrels per day.

The request comes after Iraq's Prime Minister said in August that the country will seek to lift oil production to between 8 and 10 million barrels per day over the next six years, despite ongoing war-related disruptions, as Reuters reported. Before the war began, Iraq was producing some 4 million barrels per day, and Baghdad had at the time already sent a delegation to Saudi Arabia to negotiate a higher quota baseline within OPEC — meaning the baseline question was on Baghdad's agenda before the conflict disrupted its export routes.

Iraq has been among the producers hit hardest by Iran's effective closure of the Strait of Hormuz, historically the country's primary crude export route. Last month, Iraq managed to push exports through the strait back up to around 2 million bpd, but traffic through the chokepoint remains well below pre-war levels — particularly over the past week, after the United States and Iran began fighting again. How OPEC's leadership responds to the baseline request, and whether Hormuz traffic can hold near the roughly 2 million bpd reached last month, are the near-term points of focus around Baghdad's push.

Iraq has nonetheless benefited from a special exemption granted by Iran to tankers carrying Iraqi crude, which were given the green light to pass through the Strait of Hormuz. It was unclear whether the exemption applied to all tankers carrying Iraqi crude or only some, but Iraqi flows out of the Persian Gulf have rebounded. Even so, the Hormuz blockage has forced Iraq to offer buyers substantial discounts in order to place its crude.

Reporting by Irina Slav for Oilprice.com.