Iraq faces severe economic strain as war cuts oil income and raises import costs

Since the US-Israeli war on Iran started, Iraq has been unable to move roughly 90 % of its oil through its usual Gulf corridors, wiping out an estimated $60 billion in revenue, according to Prime Minister Ali al-Zaidi. Oil earnings, which fund more than 90 % of the national budget, have plunged, driving foreign-exchange reserves down from about $106 billion to roughly $80 billion. The disruption of the Strait of Hormuz has also lengthened supply chains, inflating transport costs and pushing import prices up by 25-30 % for many Chinese and Turkish goods.

Baghdad’s dinar has weakened against the US dollar, widening the gap between the official and parallel markets and creating uncertainty for businesses. The Central Bank of Iraq says it has sufficient reserves, but analysts warn the crisis exposes deep structural imbalances and a lack of safeguards against such shocks.