Iraqi crude exports to drop 22% in 2026 amid regional tensions
The Iraqi economy faces a severe recession as international shipping routes are disrupted, threatening to shrink the local GDP by 11% next year.
International financial observers are tracking a sharp economic decline in Iraq driven by disruptions to maritime traffic through the Strait of Hormuz. The International Monetary Fund recently issued a report warning that Iraqi oil exports will fall by approximately 22 percent during 2026. This significant reduction is projected to cause the real gross domestic product to contract by roughly 11 percent. Simultaneously, both the fiscal deficit and the current account deficit are expected to rise significantly, reaching nearly 11.8 percent and 13.1 percent of GDP respectively. Although Brent crude prices are anticipated to average $89 per barrel this year, rising from $69 in 2025, analysts note that Iraq will receive limited relief from the higher rates. Large discounts on Iraqi crude sales, increased shipping costs, and export volumes remaining far below pre-conflict levels are expected to continue undermining the country's financial stability. These factors place immense pressure on public finances, the current account, and foreign exchange reserves while trade routes remain disrupted.
