Iraqi Prime Minister Ali al-Zaidi stated that Iraq is facing extraordinary economic challenges as the ongoing conflict involving the United States, Israel, and Iran severely disrupts oil exports and international trade routes.
According to al-Zaidi, Iraq has lost approximately $60 billion in oil revenues since the war broke out in late February. The financial shortfall stems from a period during which the country was unable to export roughly 90 percent of its crude oil through its traditional Gulf routes. Free passage through the Strait of Hormuz—the vital maritime transit point through which most of Iraq’s international trade passes—has been restricted, becoming a focal point in negotiations between Washington and Tehran. Tehran has linked open transit through the strait to an easing of U.S. pressure and the lifting of a blockade on Iranian ports.
The disruption to shipping channels has heavily impacted Iraq’s import-dependent domestic market. The nation relies on foreign imports for goods ranging from food and medicine to household appliances and industrial raw materials. Historically, Iraq maintained a positive trade surplus because crude oil exports offset the cost of foreign goods. However, altered transit routes have extended delivery times and raised shipping expenses for local merchants. Importers bringing goods from China report delays of up to three months due to taking circuitous routes to bypass the Strait of Hormuz or facing slowdowns at the maritime chokepoint. Additionally, trade with Turkey has been hit by elevated transportation and fuel costs.
The supply chain bottlenecks have altered local consumer inventory and driven up prices. Alaa-Eddin Sulaibi, a supermarket owner in Baghdad, estimated that imported items now account for roughly 70 percent of the goods sold in his store, down from 90 percent prior to the war. Sulaibi noted that shopkeepers have been forced to rely more heavily on local products despite quality differences, while facing increased transport costs from abroad.
The economic pressure has also affected Iraq’s currency market. On the parallel market, the exchange rate for the U.S. dollar rose to approximately 1,600 Iraqi dinars last week before easing to about 1,575 dinars this week. Before the start of the conflict in late February, the rate stood at around 1,540 dinars to the dollar. The widening gap between the official government exchange rate—set at approximately 1,300 dinars to the dollar—and the parallel market rate continues to create operational uncertainty for local businesses and heighten concern among the public.
Sources
– [Al Jazeera News](https://www.aljazeera.com/news/2026/9/26/iran-war-squeezes-iraqs-economy-as-oil-revenues-fall-and-prices-rise?traffic_source=rss)
Source: Al Jazeera News
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Story synopsis gathered from: Al Jazeera News — source
