Strait of Hormuz disruption deepens pressure on government revenues
BAGHDAD: Iraq is facing growing financial pressure after continued disruptions to oil exports reportedly delayed salary payments for many public-sector employees, according to regional media reports.
The Finance Ministry spends approximately $6.5 billion each month on salaries, pensions and social welfare payments. A senior ministry official warned that if export disruptions continue, the government may struggle to make future payments on schedule. Officials are reportedly considering extending salary disbursements to every 45 days as authorities attempt to manage declining revenues.
Iraq’s oil exports have fallen sharply since the closure of the Strait of Hormuz, dropping from around 100 million barrels in February to nearly 32 million barrels during May and June, according to figures cited from the Oil Ministry.
The decline has intensified economic concerns in a country where oil accounts for about 90 percent of government revenue, 95 percent of export earnings and more than half of gross domestic product.
Government seeks alternative export routes
Meanwhile, Baghdad has stepped up efforts to reduce the impact of the crisis by strengthening alternative export channels. Iraq recently reached a one-year arrangement with Türkiye to continue crude shipments through the Iraq-Türkiye pipeline, which has a reported daily capacity of 750,000 barrels.
Authorities have also introduced significant discounts on Basra crude exports in an effort to attract buyers despite heightened shipping risks. Energy analysts said the price reductions reflect growing security concerns rather than excess oil production.
Economic uncertainty continues to grow
Although Iraq has recorded improvements in poverty reduction during recent years, economists warn that prolonged export disruptions could reverse that progress. Reports also noted that some Iraqi-linked vessels have come under attack despite earlier assurances that Iraqi shipping would receive exemptions.
Analysts believe the country’s heavy dependence on oil revenues leaves public finances highly vulnerable to prolonged disruptions in regional energy trade. They cautioned that unless export volumes recover soon, Iraq could face increasing fiscal pressure, delayed government payments and broader economic challenges in the months ahead.
