Industry analysts say that, spurred by the international sanctions aimed at choking off Iran's oil exports, this will likely mean Iraq will push Iran out of its position as the oil cartel's second-biggest producer after Saudi Arabia.
As it is, Iraq's ambitious plan to quadruple production to as much as 12 million barrels per day by 2017 will one day challenge the kingdom itself.
Analysts are skeptical Iraq can achieve that target. But that's years down the road -- if it ever happens at all.
Usurping Iran's position in the Organization of Petroleum Exporting Countries is happening now.
Two weeks ago, Hussein Shahristani, Iraq's deputy prime minister for energy affairs, declared the country's oil production has topped 3 million bpd for the first time since 1979. Baghdad aims to boost that to 4.5 million bpd by 2013-14.
On March 14, the Oil Ministry predicted Iraq's crude oil reserves, currently pegged at 143.1 billion barrels, will double in the next few years because of wider exploration and increased development by international companies operating Iraq's major fields.
The ministry gave no details, but Baghdad is scheduled to hold an auction of licenses for 12 exploration zones, seven for oil and five for natural gas, May 30-31, the fourth since 2009.
The zones up for grabs contain an estimated 10 billion barrels of oil and 102 trillion cubic feet of gas. Fifteen licenses have been awarded to major companies since 2009.
In October 2010, Iran increased its proven oil reserves from 126 billion barrels to 150.3 billion -- a week after Iraq had upped its reserve total -- to retain its coveted second place in OPEC behind Saudi Arabia's 262 billion barrels.
That, the Financial Times reported at the time, "underlined how Iraq's steady re-emergence as a major oil player is likely to change the balance of power within OPEC over the coming years.
"The crucial battle will be over who fills the No. 2 position in terms of production behind Saudi Arabia. … By itself, Iraq's possession of large reserves will not be enough to change this."
According to Manouchehr Takin, senior analyst at the Center for Global Energy Studies in London, "Actual production capacity is what counts when it comes to the Iraq oil minister having muscle for negotiating with other OPEC ministers.
"The potential is there, but converting potential to actual is complicated."
But despite analysts' skepticism about Baghdad's announced production goals, the Iraqis are in good shape to elbow Iran aside in OPEC -- providing the country isn't ravaged once again by sectarian bloodletting following the completion of the U.S. military withdrawal Dec. 18, 2011.
Right now, Iran's oil output has fallen from 3.5 million bpd to 3 million in recent months, and that's expected to get worse as tightening international sanctions hit its energy exports.
Industry experts have predicted the sanctions, primarily targeting Iran's financial system that handles oil sales, could reduce production to 2.7 million bpd by June.
Iran faces another problem. Its efforts to upgrade its rundown oil and gas infrastructure are falling by the wayside because sanctions are cutting off urgently needed foreign investment, even as Iraq's expansion program surges ahead.
So there's no prospect of Iran being able to keep pace with Iraq's production increase over the next few years, even if it doesn't reach the Olympian levels Baghdad seeks.
But Iraqi exports are on the rise, primarily since the state-owned South Oil Co. inaugurated the first of five planned floating loading terminals in the northern gulf a few weeks ago.
The new facility, known as a Single Point Mooring platform, began operations March 8.
The new terminals will each have a capacity of 850,000 barrels per day. That will add 3.4 million bpd of export capacity, a level Iran is unlikely to match for the foreseeable future.
The Iraq-Iran rivalry will be greatly sharpened if Tehran tries to close the Strait of Hormuz, through which one-fifth of the world's oil supplies passes.
Eighty percent of Iraq's exports are shipped that way, but it still has pipelines running north to Turkey's Ceyhan terminal on the Mediterranean.
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