OPEC may have spare capacity equivalent to the combined current output of the UAE, Kuwait and Libya.
The US seeks independence from crude imports, and the greying of Japan"s population points to a steady decline in oil consumption by Asia"s largest economy. But the latest threat to OPEC comes from one of its own. Last week, Iraq, a founding member of the 12-nation group of oil exporters, signed three huge deals with foreign energy firms that in seven years could nearly triple the country"s output capacity to more than 7 million barrels per day (bpd).
Several more contracts may be awarded next month and could push Iraq"s crude-pumping capacity to 11.65 million bpd by 2017. That would put Iraqi capacity close to Saudi Arabia"s 12.5 million bpd, just as the OPEC kingpin has completed the biggest oilfield expansion programme in its history.
Because of that investment, the Saudis have borne the brunt of OPEC cuts aimed at limiting the stockpiles of unwanted crude that have piled up this year. An estimate by the Middle East Economic Survey this week put the kingdom"s October crude output at 8.2 million bpd, implying more than 4 million bpd of idle capacity.
In total, OPEC may have spare capacity equivalent to the combined current output of the UAE, Kuwait and Libya. This is expensive to maintain, and none of it is in Iraq. That country is exempt from OPEC quotas while it rebuilds its shattered economy.
The scale of Iraq"s recently unveiled plans, however, may be beyond what fellow OPEC members envisioned when they met in 2003 to debate how to digest the country"s return to the market after UN sanctions were lifted.
So far, progress has been halting. But the contracts awarded last week to consortiums of some of the world"s biggest oil companies ? BP with China National Petroleum Corporation, ExxonMobil with Shell, and a team of Eni, Occidental Petroleum and Kogas of South Korea ? may represent a breakthrough. They are aimed at boosting output from just three oilfields in southern Iraq by 4.8 million bpd, equivalent to adding another Iran or bringing all the idle Saudi capacity back online.
Throw in a few more oil discoveries, such as the two big fields that the minnows Heritage Oil and Gulf Keystone Petroleum uncovered in Iraqi Kurdistan this year, and the full potential for expanding Iraq"s oil production could be equivalent to adding another Russia, the world"s top oil producer and exporter.
But it is unlikely that the world will thirst for so much additional crude any time soon, given the current energy glut, the mixed signals on economic recovery and initiatives to fight climate change.
That presents OPEC with a dilemma: it can accommodate Iraq"s efforts to expand its petroleum sector while other members put oil developments on hold, or it can risk a mutiny if the Gulf exporters with the most to lose move to reimpose a quota on Iraq amid efforts to tighten overall OPEC discipline.
The threat of an Iraqi oil flood is taking shape as the group"s West African members, Angola and Nigeria, champ at the bit to raise output following a string of major oil discoveries.
Another conundrum for OPEC would be determining an appropriate production target for Iraq. The last time the state had a quota was in 1990, just before it invaded Kuwait. That was set at 3.14 million bpd, or 14.5 per cent of OPEC"s total output. Today, the equivalent slice of OPEC"s pie would be 4.18 million bpd, a dauntingly high volume for the other members to accommodate if oil demand remains weak.
Riyadh"s concerns over Tehran"s influence on Iraqi politics could also colour deliberations within OPEC, with the potential to exacerbate regional tensions in the Gulf if Baghdad starts flooding the market with crude.
For now, however, Iraq is only the ninth-largest oil producer worldwide, and the prime minister Nouri al Maliki and the oil minister Dr Hussain al Shahristani face huge political and legal hurdles to implementing their oil development plan. Not the least of these is an impending national election, for which plans have been disrupted by violence and a parliamentary dispute over a new election law.
Baghdad wants foreign oil firms to ramp up production quickly, but the companies may not be ready to play ball. According to Samuel Ciszuk, the Middle East energy analyst at the consulting firm IHS Global Insight, the group led by BP has negotiated a window of up to three years before it has to invest heavily, giving it time to gauge Iraq"s post-election political and security climate.
That also gives OPEC a reprieve as it confronts the imminent threat of a double-dip global recession. Iraq"s output is not an issue that will dominate next month"s meeting in the Angolan capital ? at least not publicly.