Iraq is facing significant economic difficulties as its oil exports are disrupted by the ongoing Iran war (Photo credit: Sedat Suna)
Because of the war, after the country was temporarily unable to export around 90 percent of its oil through its usual Gulf routes, iraq Prime Minister Ali al-Zaidi said Iraq had lost about $60 billion in oil revenues.
The disruption has hit Iraq’s oil revenues while pushing up the cost of imported goods, with Iraqi officials warning that the crisis is placing additional pressure on the country’s economy, according to Al Jazeera. He also described Iraq as facing “extraordinary economic challenges.” The report also highlights Iraq’s struggle to maintain crude exports while meeting domestic demand for refined fuel.
Iraq oil minister Basim Mohammed Khudhair told parliament that Iraq’s oil exports had fallen to no more than 200,000 barrels per day during the crisis. He said export capacity had subsequently recovered, with Iraq able to move up to 4.254 million barrels per day on September 20, although actual shipments remained dependent on tanker traffic through the Strait of Hormuz. Iraq’s Oil Minister Basim Mohammed Khudhair told parliament that domestic petroleum-product production stood at around 37 million litres per day, but the country still needed to import at least 5 million litres of gasoline every day to meet demand. Iraq imported an average of 3.907 million litres of gasoline per day in August to help bridge the shortfall, the official said.
Because oil revenues account for more than 90 percent of Iraq’s federal budget, meaning disruption to crude exports quickly translates into pressure on government finances, the impact is particularly severe.
During the parliamentary hearing, Khudhair said shipping costs had risen sharply amid the regional conflict, adding further pressure to the revenue Iraq earns from its oil exports. The disruption has also increased the cost of transporting Iraqi crude.