Meanwhile OPEC, of which Iraq is a founding member, is cutting production as oil prices tank.

Post-2003 oil exports surpassed the 2 million-barrel-per-day milestone in May, but the taps have slowed since, with about 1.64 million bpd last month. That's a drop from 1.75 million bpd in August, 1.9 million bpd in July and 1.94 million bpd in June when oil officials predicted 2.8 million bpd by year's end.

Officials are blaming weather, regular repairs, power outages and other technical issues, as well as attacks, which are more infrequent now than at any time since the U.S.-led invasion.

Falah al-Amri, the head of Iraq's State Oil Marketing Organization, said October exports are averaging between 1.75 million and 1.8 million bpd, Iraq's Alsumaria TV reports.

Iraq is attempting to increase production and exports to a level fitting the world's third-largest proven oil reserves. It wants to sign service contracts with the world's largest oil firms by the middle of 2009 aimed at fixing and enhancing the largest fields. It's also continuing regular maintenance and repairs.

When refineries and power plants are operating, Iraq consumes about a half-million bpd internally.

The vast majority of Iraq's producing reserves are in the south of the country, and 80 percent of exports are sent to market from the southern ports. Southern exports were 9 percent less in September than in June.

The northern pipeline is operating at less than half capacity, and regular attacks from 2003 through 2007 kept it mostly inoperable. Exports through it barely increased in September over August but still represent a 34 percent drop from June.

The Organization of Petroleum Exporting Countries said starting Nov. 1 the group's oil production will decrease 1.5 million barrels per day in an effort to stop free-falling prices. Iraq is exempt from OPEC quotas following decades of war and sanctions.

The announcement Thursday by OPEC hasn't had an immediate effect, as Brent Crude lost 2.8 percent and closed London markets at $61.79 per barrel. West Texas Intermediate Crude dropped 3.8 percent to $65.38 per barrel.

The price of oil was more than double today's price only two months ago. OPEC may decide at its December meeting to reduce output even further.

As the global economy contracts, so does the demand for oil.

"Recent projections on the need for OPEC crude for the next two calendar quarters suggest a "call' on OPEC in the range of 30.4 (million) to 31 million (bpd), yet OPEC's September output is estimated to have been above 32.2 (million bpd), so the 1.5 (million bpd) target reduction was not unexpected," the Center for Strategic and International Studies' Energy and National Security Program Director Frank Verrastro and fellow Sarah Ladislaw wrote Friday. "Despite the OPEC announcement, however, prices have continued to fall, indicating a high degree of skepticism that either the cut will be sufficient to stem the decline or that OPEC members' discipline in meeting the reduction targets can be assured."

Iraq's oil fetched an average of $85 per barrel in September, down from $123 in June. Iraq's Finance Ministry is scaling down its budget for next year in light of the price drop.

The U.S. State Department's Iraq Weekly Status Report still projects Iraq's oil income will exceed the $41 billion made last year by more than $14 billion. The report, released Thursday, expects October oil sales to increase compared with September but earn less because of the price drop.

(e-mail: [email protected])

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