Iraq's economy squeezed as Iran war cuts oil revenues and disrupts trade

September 26, 2026 at 01:13 PM2 min

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Iraq's Prime Minister Ali al-Zaidi said the country lost about $60bn in oil revenues due to the US-Israeli war on Iran and the disruption of shipping through the Strait of Hormuz. The crisis has pushed the Iraqi dinar to about 1,600 per US dollar on the parallel market and raised prices of imported goods by 25-30 percent. The disruption has forced Iraqi businesses to rely more on local products even as imports from China face delays of up to three months.

Key Facts

Iraq lost about $60bn in oil revenues due to the war, according to Prime Minister Ali al-Zaidi.
Oil revenues account for more than 90 percent of Iraq's federal budget.
The dollar rose to about 1,600 Iraqi dinars on the parallel market last week, before easing to about 1,575 this week.
Imported goods at one Baghdad supermarket fell from 90 percent of stock before the war to 70 percent now, with prices up 25-30 percent.
Goods imported from China face delays of up to three months due to longer routes bypassing the Strait of Hormuz.

Oil Revenue Loss

Prime Minister Ali al-Zaidi said earlier this week that Iraq had lost about $60bn in oil revenues as a result of the war. The loss stemmed from Iraq being unable to export about 90 percent of its oil through its usual Gulf routes for a period. Oil revenues account for more than 90 percent of Iraq's federal budget. The Strait of Hormuz has become central to negotiations between Washington and Tehran, with Iran linking free passage to an easing of US pressure and the lifting of a blockade on Iranian ports.

Trade Disruption

The disruption to shipping routes has increased transport times and costs for Iraqi businesses and consumers, in addition to reducing imports. One supermarket owner in Baghdad, Alaa-Eddin Sulaibi, estimated that imported goods now make up 70 percent of his stock, down from 90 percent before the war. Sulaibi said the price of imported goods had risen by between 25 and 30 percent. Several merchants told Al Jazeera that goods imported from China face significant delays, in some cases taking up to three months to arrive. Importers are forced to take more circuitous routes to bypass the Strait of Hormuz or face delays at the maritime chokepoint.

Currency Pressure

The crisis has put pressure on the Iraqi dinar, which has dropped against the US dollar. The dollar rose to about 1,600 Iraqi dinars on the parallel market last week, before easing to about 1,575 this week. The dinar's decline has triggered concern among Iraqis.