Iraq recently announced that it was exporting over 3 million barrels a day in oil but this is coming at a huge cost due to Iranian fees to pass through the Strait of Hormuz.
Since the start of September Iraq is selling more than 3 million barrels a day in oil. That is at pre-war levels and is a huge relief for Baghdad which is the most petroleum dependent country in the world.
It was recently revealed that the revival in sales however has come at a hefty price. In order for Iraq’s oil to pass through the Strait of Hormuz it had to make a deal with Iran which was announced in March. That included paying fees to Tehran. A financial analyst estimated those totaled $1.3 billion in August alone out of $4.5 billion in petroleum revenue. That means even though exports have returned to pre-war levels the amount of money the state is bringing in has not.
The government’s bills are huge. It needs around $6 billion a month just for salaries, pensions and welfare.
The Baghdad has been going into debt to cover its obligations while the Iran War continues. Its domestic debt went from 90.515 trill dinars at the end of 2025 to 106.072 trillion dinars by the end of June. It has been drawing down the Central Bank’s foreign reserves to cover its bills. From January to June reserves have declined $11.267 billion.
With the war seeing no end in sight Iraq will remain in a precarious financial situation. Even when it does conclude there is no telling whether Iran will stop charging for passage through the Strait of Hormuz meaning Iraq may not be able to recover fully.
SOURCES
Bas News, “Iraq Secures Iran Approval for Oil Tankers to Transit Strait of Hormuz: Oil Minister,” 3/17/26
Al Jazeera, "'There is no money': Is Iraq entering a phase of lean years?" 8/6/26
Khan, Sarmad, “Iraq boosts oil production capacity to three million bpd amid Strait of Hormuz attacks,” The National, 9/6/26
Al-Samarraie, Jawad, “CBI: Iraq’s domestic public debt reaches 106T dinars in H1 2026,” Iraqi News, 8/31/26
- “Iraq foreign reserve decline 11.6% to $86.17B in June 2026,” Iraqi News, 8/24/26
- “Al Marsoumi: Iran's Hormuz fee drains 1/3 of Iraq’s oil revenue,” Iraqi News, 9/9/26
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