Iraq has ambitious long-term plans to hike oil output. It has already notched up impressive gains. But further growth is being hamstrung by the cash-strapped country’s need to slash spending.

Despite going cap in hand to the IMF this week, Iraq has pledged to make 2016’s payments to IOCs on time, but its efforts to minimize payment levels are hindering plans to boost oil production.

Oil prices have risen 75% since Brent bottomed out at $27.88/B on 20 January. But even current...