Iraq at an economic crossroads: Fears of a rising dollar and debate over remaining in OPEC

Anxiety continues to grip a large segment of the Iraqi population, particularly those with limited incomes and low salaries, amidst economic instability and conflicting reports regarding the exchange rate of the dollar against the dinar. The Iraqi public is most concerned about market prices and their susceptibility to government decisions regarding the dinar-dollar exchange rate, as well as the future of Iraq’s membership in OPEC, its oil export volumes, and the implications of these factors for the country’s economic policy and how the government will address them.

Former MP Rasoul Radhi told Al-Maalomah that “the ongoing financial crisis, coupled with regional developments and the current difficulties in exporting oil, will lead to a significant rise in the dollar exchange rate in local markets.”

He added that “the current exchange rate exceeds 155,000 dinars per 100 dollars and may rise further in the coming days, especially since the government intends to raise the official exchange rate if the economic situation remains unchanged.”

He explained that “the measures the government may take in the coming days aim to compensate for the shortfall in oil export revenues, and the official exchange rate is likely to increase by 6,000 dinars from its current level.”

For his part, economist Abdul Rahman Al-Mashhadani told Al-Maalomah that “talking about Iraq leaving OPEC is not a simple matter at all, as Iraq cannot leave the organization because it would not be able to withstand any price war that might erupt.”
He added that “Iraq has already suffered greatly from the price war between Russia and Saudi Arabia, which prompted Riyadh to reduce the price of a barrel of oil by more than $7 while increasing production by about 500,000 barrels, leading to a drop in the price per barrel to about $18.”

He pointed out that “Iraq lacks the resources to withstand any price war, in addition to its lack of a sovereign wealth fund and diversification in exports and production. Therefore, any decrease in oil prices will significantly affect it.” He emphasized the importance of Iraq remaining within OPEC, while exerting pressure to adjust its export quota, based on its high production capacity and its status as the fifth largest country in the world in terms of oil reserves.

In a related context, Abdul Rahman al-Jazaeri, a member of the Coordination Framework, confirmed in a statement to Al-Maalomah that “Prime Minister Ali al-Zaidi is an expert in economic affairs and continues to work on finding solutions to the economic problems that Iraq is currently suffering from.”

He continued, “Al-Zaidi’s expertise in the economic field has driven him to take action to find ways out of the current crises facing the country, which may lead to an increase in the exchange rate of the dollar against the Iraqi dinar.”

He added that “Iraq is moving towards a new economic program that may include raising the value of the dollar against the dinar, due to the economic hardship and problems facing the country, which the Prime Minister is working to address according to an economic vision aimed at enabling Iraq to overcome its crisis.” Arabs& Middle Easterners

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Analysis: Iraq races to maximize its oil revenues before global demand declines

Reuters highlighted Iraq’s move to increase its oil production and maximize the benefit from its reserves, noting that Baghdad, along with the UAE, is racing against time to convert its reserves into revenues before the global shift in the energy sector leads to a decline in oil demand.

The agency stated, in an analysis published in its “Gulf Currents” bulletin, that Iraq and the UAE, despite their different economic circumstances, are adopting an approach based on the premise that postponing the exploitation of oil reserves may be more costly than accelerating their production at the present stage.

She pointed out that Iraq relies on oil for about 88% of government revenues, explaining that the recent war and the accompanying unrest prompted Baghdad to reduce its daily production from about 4.2 million barrels to less than 1.5 million barrels during May, which increased the need to raise production to compensate for lost revenues.

She added that new investments worth billions of dollars from BP, Total Energies and ExxonMobil have boosted expectations that Iraq can turn its large oil reserves into sustainable financial returns, but this trend coincides with concerns about a structural decline in global oil demand in the coming years.

She pointed out that the biggest challenge lies in the possibility that a number of producing countries will rush to increase supplies at the same time, which could lead to a glut in the market and a drop in prices, given expectations that global supply will rise by about eight million barrels per day during 2027, compared to slower growth in demand.

Reuters concluded that Iraq and the UAE’s gamble hinges on timing, amid questions about when global oil demand will permanently decline, and whether producers will be able to maximize returns from their reserves before that happens.

Iraqi Prime Minister Ali al-Zaidi had announced Iraq’s desire to raise crude oil production rates to about 7 million barrels per day, and indicated that American companies had been informed of this vision.

Shafaq.com

Central Bank of Iraq: Domestic currency issued rose to 112.9 trillion dinars by the end of April

Data from the Central Bank of Iraq, released on Thursday, showed that the volume of currency issued in the country rose to 112.896 trillion dinars from the beginning of 2025 until April 2026. News

According to data seen by Shafaq News Agency, the total currency issued during the past year amounted to 99.799 trillion dinars, and 13.097 trillion dinars were added to it during the first four months of this year.

The net currency traded outside banks rose to 104.542 trillion dinars, after reaching 92.560 trillion dinars at the end of 2025, registering an increase of 11.982 trillion dinars.

The currency held by banks also increased to 8.354 trillion dinars by the end of April 2026, compared to 7.239 trillion dinars at the end of 2025, an increase of 1.115 trillion dinars.

These indicators point to the growth in the volume of issued and circulating currency in the Iraqi economy during the first months of 2026, coinciding with an increase in circulating cash liquidity and a rise in the volume of cash held by the banking sector.

Shafaq.com

More than 8 million barrels of Iraqi oil are stuck on tankers despite the return of Gulf supplies.

More than 8 million barrels of Iraqi crude oil remain stuck on tankers, while more than 100 million barrels of crude oil and petroleum products that had accumulated in the Gulf have begun to gradually return to global markets, providing a temporary relief to supplies, according to data from Standard & Poor’s Global Commodity Insights.

The report stated that Iraq has emerged as one of the leading countries in the recovery of oil production in the Middle East, along with the Sultanate of Oman, while major refineries in Saudi Arabia, Bahrain and Kuwait still need several months to restore their full operational capacity.

According to the data, the accumulated quantities of crude oil amounted to about 90.5 million barrels, while the remaining quantities were distributed among various petroleum products, with more than 90 million barrels of crude oil on board tankers waiting to leave.

Estimates also showed that Iraq has about 8.3 million barrels of oil stuck on tankers, coming after Iran (31.7 million barrels), Saudi Arabia (18.7 million barrels), and the UAE (17 million barrels), while Kuwait recorded 8.1 million barrels, Qatar 4 million barrels, and Oman 2.2 million barrels.

The report indicated that most Gulf oil exports are destined for East Asian markets, meaning that the return of these supplies could affect the balance of global supply and demand, and be reflected in the movement of oil prices and the revenues of producing countries, at a time when global banks expect exports to return to pre-war levels during the current month of July, with continued concerns that the impact of these quantities will be temporary before the actual production in the region recovers.

Shafaq.com

Security cooperation between Baghdad and Erbil: Will it bring American oil companies back to Kurdistan?

Security coordination between Baghdad and Erbil is flourishing despite years of regional conflict, which is enticing American and Western oil companies to return to the Kurdistan Region, while Baghdad is moving to deploy air defense systems in the region to secure an air protection umbrella for it, according to a summary presented by the British website “Amwaj”. News

The air defense systems are intended to protect oil and gas fields from a repeat of the drone attacks that have plagued such sites in recent years.

According to the British website’s report , translated by Shafaq News Agency, this security agreement between Baghdad and Erbil comes at a time when Prime Minister Ali al-Zaidi pledged to foreign energy companies that Iraq would be able to protect their investments .

The British report continued that the potential deployment of air defense systems could represent a significant shift in the historically strained relationship between the federal government and the region, noting that the ongoing dialogue about air defense systems also coincides with the efforts made by US Presidential Special Envoy Tom Barrack to unite the two neighbors within a single economic and security framework .

Although he pointed to “headwinds” represented by the Kurdish leaders’ commitment to ensuring that the regional government retains control over its security and autonomy, he believed that the direct threat of regional escalation and the shared vulnerability of Iraq’s vital energy infrastructure necessitate a practical compromise . In this context, he noted the recent visit of a high-level Iraqi security delegation to Erbil to assess the mechanisms for deploying air defense systems at energy sites in the region, even though federal officials had previously expressed concern about Kurdish forces gaining more autonomy in security matters.

Therefore, the report considered that visit to indicate a shift in priorities, and that this increased security coordination is driven by the shockwaves caused by the Israeli-American strikes on Iran on February 28, as the region found itself on the front lines of retaliatory attacks, including targeting energy infrastructure sites, some of which are linked to international companies such as the US-based Carr Group and HKN.

According to the report, these attacks disrupted domestic production and exposed deep vulnerabilities of Western commercial interests to Iranian-backed militias.

The report added that the al-Zaidi government, recognizing that international oil companies would not resume operations without strict security guarantees, appeared to have moved quickly to bridge the historical gap between Baghdad and Erbil .

The report quoted Caroline Rose, a researcher at the Soufan Center in the United States, as saying that the potential deployment of air defense systems in the Kurdistan Region would represent a “new level of relations” between the federal and regional authorities, after attacks on energy sites revealed the vulnerability of these facilities. She added that this mutual threat has prompted both sides to postpone their long-standing disputes, at least partially, in order to establish “sustainable air defense systems” around vital infrastructure .

While Rose said that the possibility of concluding an air defense agreement could be a starting point for further coordination, and that current efforts would primarily represent a “confidence-building measure,” the report quoted Erbil-based analyst Vladimir van Wilgenburg as saying that the move to deploy air systems “could translate into broader security cooperation, such as joint exercises involving Iraqi security forces and the Peshmerga.”

The report quoted Mohammed Saleh, a researcher at the American Foreign Policy Research Institute, as saying that the move by Baghdad towards the region was long overdue, considering that Washington must pressure Baghdad to facilitate the deployment of the air systems, but he warned that the systems should not become a means for Baghdad or the factions allied with Iran to expand their influence and control over the Kurdistan Region.

After discussing al-Zaidi’s campaign to “monopolize weapons,” which primarily concerns groups operating under the banner of the Popular Mobilization Forces, the report noted that Kurdish leaders say that Baghdad’s efforts will not extend to the Peshmerga.

The report quoted Saleh as saying that there are no plans to “subject the Peshmerga” to the same disarmament procedure, noting that the special status of the Peshmerga is recognized under Article 121 of the Iraqi Constitution, and that, in contrast, the Popular Mobilization Forces were only formalized as an element of the Iraqi armed forces under the parliamentary mandate in 2016 . Arabs& Middle Easterners

The report stated that the flourishing coordination between Baghdad and Erbil on security is playing a role in enticing Western oil companies to return to Iraq, pointing, for example, to the position of Chevron and Halliburton in meeting with Iraqi officials to hold talks on restarting their investments, coinciding with hopes that Iranian-American talks could prevent a renewal of the regional conflict.

The report noted that the apparent interest shown by Western companies in this return is consistent with broader US strategic objectives aimed at countering increasing Chinese and Russian involvement in Iraq’s energy sector.

Wilgenburg was quoted as saying that “the Trump administration was one of the few administrations that managed to bring American oil companies back into the Iraqi energy sector.”

The report concluded that the future benefit of Iraq’s oil and gas sector depends on addressing the root cause of instability, rather than merely protecting against it. While tactical defensive measures in Iraqi oil fields may provide immediate reassurance to foreign investors, they do not eliminate the broader, fundamental political and military threats to Iraq’s stability. Therefore, the report quoted Wilgenburg as saying that any move by Baghdad to “dismantle the Popular Mobilization Forces” would be more effective than deploying air defense systems in the Kurdistan Region.

Shafaq.com

Al-Zaydi launches the biggest battle against corruption… Will the Iraqi economy begin its recovery journey?

Despite possessing one of the world’s largest oil reserves, the Iraqi economy faces significant challenges. It remains heavily reliant on oil revenues, while state institutions suffer from administrative corruption, weak economic diversification, and declining public trust in the banking sector, in addition to the impact of political and regional conflicts. Since 2003, Iraq has faced accumulating challenges that have affected the efficiency of state institutions and delayed the implementation of numerous development and reconstruction projects. Today, with the new government’s approach, an opportunity has emerged to launch a reform phase that could rebuild confidence in the Iraqi economy and pave the way for investment and sustainable development.

Analysis

The arrest campaigns carried out by the new Iraqi government under Prime Minister al-Zaidi represent a significant step in the fight against corruption, and a message that the state is moving towards strengthening the rule of law and holding accountable those proven to be involved in the squandering of public funds. However, these measures should be the beginning of a long reform process that addresses the root causes of corruption, and not be limited to prosecuting individuals alone.

Over the past years, corruption has been linked to the structure of state institutions, as some government institutions have transformed from public service providers into centers of political and financial influence, which has weakened the efficiency of management and affected the state’s ability to implement its development projects and attract investments.

Financial reform stands out as one of the most important tools for change. The transition to a more transparent financial system, based on digital transactions and modern oversight, contributes to documenting the flow of funds, reducing money laundering, and minimizing opportunities for bribery and tax evasion. In the modern economy, the efficiency of the financial system has become one of the most important indicators that investors rely on when making their decisions.

Moreover, the relationship between the economy and security has become more intertwined than ever before. The stability of financial and administrative institutions not only reflects on economic performance, but also enhances political stability and strengthens the confidence of the local community and international partners in the state’s ability to manage its resources efficiently.

Therefore, developing the banking system, strengthening financial compliance, and increasing transparency are all essential factors in creating a more stable investment environment. The greater the confidence of both local and foreign investors, the greater the opportunities for implementing new projects, creating jobs, and diversifying national income sources away from near-total dependence on oil.

This stage also requires launching a national program for institutional reform, based on modernizing state institutions, developing oversight systems, enhancing the independence of oversight and judicial bodies, and simplifying administrative procedures, in order to reduce bureaucracy and increase the efficiency of government performance.

At the same time, investment in infrastructure is one of the most important keys to economic growth. Rehabilitating electricity, water, road, port, and public service networks will provide a more attractive environment for investment, support the private sector, and contribute to improving the quality of life for citizens.

From an economic standpoint, genuine reforms can boost investor confidence, strengthen the banking sector, reduce money laundering, improve public revenues, encourage local and foreign capital to invest in Iraq, expand the use of the formal banking system, and shrink the size of the informal economy.

If reforms remain limited or merely cosmetic, the same challenges may persist, including weak investor confidence, capital outflows, continued reliance on cash, and declining efficiency of financial institutions, limiting the economy’s ability to achieve sustainable growth.

Conclusion

The new government’s anti-corruption campaign represents an important opportunity that could establish a different phase in the history of modern Iraq. However, its true success will not be measured by the number of detainees, but rather by the state’s ability to transform these steps into a comprehensive institutional and financial reform project that enhances transparency, enshrines the rule of law, and strengthens state institutions.

More than two decades have passed since 2003, and today Iraq has an opportunity to rebuild its economy on more sustainable foundations by attracting investments, developing infrastructure, diversifying sources of income, and establishing an economic environment based on efficiency, transparency, and accountability.

If the government succeeds in combining anti-corruption efforts with economic and administrative reform, this could mark the beginning of a new phase that opens up broader horizons for growth and stability, restores Iraq’s economic standing, and gives citizens hope for a more prosperous future.

Economic Studies Unit / North America Office,

Rawabetcenter.com

Washington resumes dollar shipments to Iraq after months of suspension

The New York Times revealed on Thursday that the United States has resumed dollar shipments to Iraq after a months-long suspension.

The newspaper reported that “the United States has resumed some airlifts of US dollars to Iraq, after several months of suspension, in a move that was intended to put pressure on the Iraqi government to distance itself from Iran.”

The newspaper quoted two aides to Iraqi Prime Minister Ali al-Zaidi as saying that “the resumption of dollar transfers came after a hiatus of several months.”

Burathanews.com

Gold records its biggest monthly collapse in 18 years

Gold prices fell by more than 1% on Tuesday, heading towards their biggest monthly decline since October 2008, driven by rising expectations of a US interest rate hike to combat inflation.

Spot gold fell 1.5% to $3,956.92 an ounce, marking a sharp monthly loss of 12.7%, its fourth consecutive monthly decline. Meanwhile, US gold futures for August delivery fell 1.7% to settle at $3,969.30.

The precious metal is also on track for its first quarterly loss since 2024 and its largest quarterly decline since the second quarter of 2013, due to pressure from a strong dollar and high global inflation rates.

As for other precious metals, silver followed the downward trend, declining by 2% to $57.13 per ounce. Platinum also fell by 1.1% to $1,557.21, and palladium dropped by 0.4% to settle at $1,208.17.

Almaalomah.me

Washington is preparing a “blacklist” and moving to dismantle Tehran’s influence in Baghdad.

David Des Roche, an associate professor at the Center for Near East and South Asian Security Studies and a former defense policy official in the US Secretary of Defense’s office, asserted that Washington views the recent “anti-corruption” campaign in Baghdad as a necessary step to dismantle “Iranian influence.”

Des Roche, who previously held sensitive positions in the Pentagon and the White House, said, “There are unannounced American expectations that political and security figures linked to Tehran should be removed from the Iraqi scene.” MiddleEast news

He added: “Washington has always considered rampant corruption, particularly Iranian-backed corruption, a real obstacle to establishing a close relationship between Iraq and the United States. Iraq is seen as a state with somewhat diminished sovereignty, given that Iranian-directed militias, funded by the Iraqi government, challenge the will of the state itself. Therefore, any move that shows a genuine desire to eradicate the corruption and violence rampant in the system would be very welcome in Washington.”

The American strategic expert warned of potential security repercussions that the affected parties might resort to in order to destabilize the Iraqi government.

He continued, saying: “There are concerns about instability within the Iraqi government as a result of this campaign. We have seen the Iranian Revolutionary Guard’s playbook in Lebanon, where they resort to threatening the entire country with sliding into chaos if they feel that Iranian interests are threatened. This possibility exists in Iraq, but given the current level of confrontation between the United States and Iran, Washington sees this action as something that must be done, even if it is difficult and involves some pain.”

Des Roche added that the Trump administration is seriously looking to eradicate the “malign activities” of non-state actors linked to Iran, stressing that “after the gradual destruction of Lebanese Hezbollah, the various Iraqi militias are now the most powerful part of this Iranian system.”

Regarding the conditions and guarantees that Washington demands to prove the seriousness of this campaign, Des Roche revealed the view of American political and security circles: “I don’t think that the United States has specific figures and indicators, but it wouldn’t surprise me if there were a list of names of politicians and figures in the security services whom Washington believes do not serve Iraqi interests but rather Iranian interests. Washington would tell Baghdad: In order to be a credible government, you must at least not include these people in power, and better yet, deal with them through the judiciary.”

The American expert also pointed out that Washington is looking to reduce the influence of the factions under the umbrella of the “Popular Mobilization Forces” which operate as “proxies for Iran”.

Des Roche cited as an example the ongoing trial of Mohammed Baqir al-Saadi in New York, stressing that such figures are of great concern to the United States, and that any Iraqi action against them or their infrastructure would be a very welcome step in Washington.

On Sunday morning, Baghdad and several other provinces witnessed a large-scale arrest campaign targeting political officials, members of parliament, and businessmen. It was described as one of the largest anti-corruption operations in years, targeting networks accused of wasting public funds and smuggling billions of dollars, amid indications that the investigations may extend to include high-ranking figures in the state.

Prime Minister Ali Faleh al-Zaidi confirmed during a cabinet meeting last night that the campaign represents a “first phase” within the anti-corruption file. While pledging to continue procedures to recover public funds, he tasked oversight bodies with receiving any indicators related to government performance or the performance of ministries, in order to uncover cases of corruption or negligence.

Earlier on Monday, Iraqi government spokesman Haider al-Aboudi confirmed that the government is continuing its fight against corruption and protecting public funds, noting that 21 people involved in Operation Dawn Charge had been arrested.

Shafaq.com

After Washington, Al-Zaidi announces a tour to Türkiye, Saudi Arabia, and Iran.

Iraqi Prime Minister Ali al-Zaidi announced on Tuesday that his upcoming visit to the United States will be followed by a tour that includes Turkey, Saudi Arabia and Iran, while confirming that the government has not found any evidence to support the accusations regarding attacks on Gulf states being launched from Iraqi territory. Iraqeconomic reports

Al-Zaydi told Asharq Al-Awsat newspaper that his foreign travel program includes, after the visit to the United States, working visits to Türkiye, Saudi Arabia and Iran.

He stressed that the government has not found any evidence that the attacks targeting the Gulf states originated from Iraqi territory, noting that specialized committees have been formed to investigate this matter.

He added that he had informed all security force commanders of the need to confront any attempt to use Iraqi territory to attack neighboring countries.

On the economic front, Al-Zaydi explained that the government is proceeding with the establishment of the “Energy and Development Fund,” in which the Central Bank of Iraq will contribute, and which will be offered for public subscription, with invitations extended to Saudi Arabia, the UAE, and Qatar, in addition to American and European funds and banks, to contribute to it.

He stressed that Iraq will not enter into a loan program from the International Monetary Fund, noting that the government seeks to adopt a market economy and work on amending economic laws that are no longer in line with the current reality.

On the oil file, he said that Iraq’s share in OPEC is not commensurate with its circumstances, population size, and the cost of the war on ISIS, stressing Baghdad’s pursuit of a fairer mechanism for distributing oil export quotas.

Al-Zaydi also stressed that his government is continuing to fight corruption and end the phenomenon of weapons outside the framework of the state, stressing that the factions have begun to hand over weapons, and that the state will not accept the presence of any armed entity outside its institutions.

Earlier, an informed source told Shafaq News Agency that Prime Minister Ali al-Zubaidi will discuss during his upcoming visit to Washington next month the release of one of the Iraqi bank guarantees held by the United States, estimated at about $30 billion, in addition to economic and investment files.

Shafaq.com