Oil below $70… Iraqis fear stifling economic and financial repercussions
Oil below $70… Iraqis fear stifling economic and financial repercussions
2-29-2025
Information/Report
Oil prices represent a major concern for Iraqis, especially the executive authority and the parties responsible for formulating the budget, which is based on an average price of $70 per barrel. This comes at a time when prices are experiencing a significant decline due to numerous external factors.
Global oil prices are witnessing a worrying decline, threatening the financial balance in Iraq, which relies almost entirely on oil revenues to finance its budget.
This decline, which has touched the $70 per barrel threshold in futures contracts, has raised serious concerns within government, parliamentary, and economic circles, especially given the absence of real alternatives capable of covering the potential revenue gap.
Iraq relies on oil revenues for more than 90% of its general budget, which includes huge operating allocations, most notably the salaries of more than 4 million government employees.
“Seventy-five percent of revenues are directed toward operating expenses, which puts the state in a sensitive position in the face of any fluctuations in the oil market,” parliamentary finance committee member Jamal Ahmed told Al-Maalouma News Agency. He explained that “a one-dollar daily drop in the price of a barrel of oil means a loss estimated at approximately $3.5 million per day for Iraq.”
She added, “The state is in dire need of finding real economic alternatives that contribute to securing budget expenditures, both operational and investment, warning that the continuation of this situation exposes the country to recurring funding crises with each cycle of price decline.”
For his part, State of Law Coalition member Imran Karkoush believes that what is happening is the result of the absence of a comprehensive economic vision for years, as Iraq has remained “hostage to global market fluctuations,” relying on a rentier economy without developing alternative sectors.
Karkoush told Al-Maalouma, “Iraqis’ hopes are now pinned on the rise and fall of oil prices, which is a cause for concern.” He added that “government policies have failed to break this cycle, despite repeated calls for economic, agricultural, and trade openness with other countries to provide sustainable financial alternatives.”
In the same context, economic expert Diaa Al-Mohsen warned against the consequences of complete reliance on oil, noting that “the absence of alternative sectors poses a serious threat to the country’s financial and economic stability.”
Al-Mohsen told Al-Maalouma, “The real reason behind the price decline is OPEC’s production increase of approximately 260,000 barrels, along with global political tensions, and not just trade factors such as US tariffs.”
He added, “Iraq needs a comprehensive economic strategy that ensures diversification of national income sources,” noting that “the continued decline in prices may not have an immediate impact, but its repercussions could be significant in the near term, especially in light of the huge financial obligations that cannot be postponed.”
Despite some experts’ assurances that the government is able to secure salaries even if the price of a barrel falls to $45, popular concern remains justified in the absence of clear plans to reduce dependence on oil and enhance economic stability.
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