Tehran’s control over Baghdad may create conditions for more extreme protests, expert tells ‘Post’

Iraq faces growing financial strain as it struggles to meet obligations tied to public salaries, exacerbated by an ongoing oil export crisis linked to the prolonged closure of the Strait of Hormuz. According to reports from Arab media, many public employees have yet to receive their July wages, highlighting the severity of the economic challenge. The Finance Ministry estimates that the country spends roughly $6.5 billion monthly on public sector salaries, pensions, and social welfare programs. A senior official within the ministry expressed concern that if the export disruptions persist, future salary payments might become increasingly delayed. The situation has worsened as Iraq’s oil exports have significantly declined since early 2026. Data obtained by The National from the Oil Ministry indicates that exports dropped from 100 million barrels per month in February to approximately 32 million barrels in May and June. This sharp decline has placed immense pressure on the national budget, particularly given that oil constitutes 90% of government revenue, 95% of export earnings, and over 53% of the country’s GDP. Efforts to mitigate the impact of the export crisis include a one-year agreement with Turkey to facilitate oil shipments via the Iraq-Turkey pipeline. Turkish Energy Minister Alparslan Bayraktar confirmed that the arrangement allows for a daily capacity of 750,000 barrels. However, despite these measures, Iraq remains billions of dollars short due to the overall disruption of its primary export route. To attract buyers amid heightened risks, Iraq has introduced substantial discounts on Basra crude. Reports indicate that the country is offering nearly $30 per barrel in reductions, although the extent of these discounts fluctuates based on perceived risks. Asem Jihad, an oil expert and former spokesperson for the Oil Ministry, noted that such price cuts do not necessarily signal an excess supply but rather reflect increased operational risks in the region. The crisis in the Strait of Hormuz has intensified following incidents involving Iranian drone boats targeting several vessels. In mid-March, two tankers, Safesea Vishnu and Zefyros, were attacked while transporting Iraqi fuel cargo. Although Iran has pledged exemptions for Iraqi vessels using the strait, the attacks underscore the persistent security challenges faced by regional shipping lanes. Despite these difficulties, Iraq has made strides in reducing poverty levels, with the Multidimensional Poverty Index showing a decrease from 23% to 17.5% over the past three years. Nonetheless, the continued closure of the Strait of Hormuz threatens to reverse this progress, as highlighted by organizations like the Borgen Project. As the situation unfolds, the focus shifts to how effectively Iraq can navigate these challenges. With discussions underway regarding a new long-term agreement with Turkey, the coming months will reveal whether these efforts can stabilize the nation’s economic outlook amidst the ongoing turmoil in the Gulf.