Iraq Considering Emergency Economic Plan Until Oil Exports Revived

   

An economic advisor to Prime Minister Ali al-Zaidi said that the government was considering a 100 day emergency economic plan to cover spending and the budget until oil exports could return to pre-war levels.

 

Iraq is the most oil dependent country in the world so the closure of the Strait of Hormuz its main export route during the Iran War devastated the country. Petroleum sales constitute around 90% of the state’s revenues. The result was huge budget deficits which the government is trying to manage.

 

In April and May Baghdad only averaged $1 million a month from oil exports. At the same time the government was spending around $7.5 billion a month with almost 75% of that made up of public salaries, pensions and welfare.

 

To cover the difference the government has been issuing treasury bills and bonds to domestic banks which is the major part of the emergency strategy. Those institutions have been taking money from the Central Bank of Iraq’s foreign reserves to buy these public offerings. The Central Bank said that in March it had $99.58 billion in reserves. That went down to $97.06 billion in April and $90.8 billion in May. This is considered a sustainable issue as long as things return to normal soon.

 

The big questions is when can oil sales go back to pre-war levels. During the war the government was playing down the matter as it often does during crises. The Deputy Oil Minister Basim Mohammed for example said that petroleum production and exports could be revived in just a week after the Strait of Hormuz was re-opened. Now officials are saying this will be a gradual process that could take months. Oil fields are already ramping up output, but foreign workers have to return who left during the conflict, the country’s loading facilities have limited capacity to fill tanker ships, and more. The bigger issue is that ship traffic is flowing again at least for now. That is the reason why Baghdad is talking about an emergency plan to manage this situation until things return to normal.

 

SOURCES

 

Al Alam, “”Force Majeure” Delays Oil Flow; Domestic Borrowing Secures Salaries; 2026 Budget on Hold,” 6/24/26

 

Reuters, “Iraq says oil output, exports can recover within a week once Hormuz crisis ends,” 5/2/26

 

Salem, Amr, “Central Bank of Iraq’s foreign reserves drop in Q2 2026,” Iraqi News, 6/18/26

- “Iraq’s domestic debt rises to $73 billion,” Iraqi News, 6/24/26

- “Iraq’s financial revenues hit $23.6 billion from January to April,” Iraqi News, 6/16/26

 

Van Heuvelen, Ben, Hussein, Mohammed, “Iraq leans on central bank reserves to weather oil export collapse,” Iraq Oil Report, 6/22/26