Iran war squeezes Iraq’s economy as oil revenues fall and prices rise

Since the US-Israeli war on Iran began in February 2026, Iraq's economy has faced severe challenges. Prime Minister Ali al-Zaidi stated that Iraq lost about $60 billion in oil revenues due to being unable to export 90% of its oil through Gulf routes, which are now central to negotiations between Washington and Tehran. This disruption has impacted supply chains, increased transportation costs, and reduced imports, with a Baghdad supermarket owner noting a drop from 90% to 70% in imported goods sold. Iraq's heavy reliance on oil, over 90% of its federal budget, worsens the economic crisis.