Iraq Loses $60 Billion in Oil Revenue Amid Regional War

Iraq is experiencing a severe economic crisis following the start of a US-Israeli war on Iran in late February. The conflict has disrupted trade through the Strait of Hormuz, preventing Iraq from exporting up to 90 percent of its oil through traditional Gulf routes. This disruption has resulted in a loss of approximately $60 billion in oil revenues, straining a federal budget that relies on oil for over 90 percent of its funding.

Ali al-Zaidi, the Prime Minister of Iraq, stated the country is facing extraordinary economic challenges. The revenue loss has caused the Iraqi dinar to depreciate against the US dollar, while the cost of imported goods has risen by 25 to 30 percent due to higher transport costs and longer shipping routes.

Financial instability is further compounded by the United States government, which has periodically halted physical cash shipments of oil revenues from a US-managed account to Baghdad. US officials cited concerns over dollar smuggling and Iran-backed militias as reasons for the delays. While the Central Bank of Iraq denies a foreign currency shortage, reports from the prime minister's financial adviser indicate that foreign reserves fell from $106 billion to roughly $80 billion by late August.