Iraq's monthly oil revenue collapsed 84%, from $6.8 billion to $1.1 billion, after the Strait of Hormuz crisis cut off its main export route. The country has since clawed exports back above 3 million bpd, but output remains well below pre-crisis levels.
Iraq's oil sales have taken a direct hit from the US-Iran standoff over the Strait of Hormuz, and the country's own prime minister has now confirmed the damage. Iraq derives roughly 90% of its government revenue from crude exports, so the disruption became an immediate fiscal crisis rather than a distant market story.
Production cratered when the strait closed
Iraqi oil production fell from an average of 4.3 million barrels per day before the conflict to about 1.4 million bpd after the disruption began. Monthly revenue followed the same path, dropping from $6.8 billion in February 2026 to $1.1 billion by April — an 84% collapse.
Roughly 20% of global oil supply passes through the Strait of Hormuz on any given day. Tanker traffic through the waterway faced closures and severe restrictions once the US-Iran conflict escalated on February 28, 2026. Iraq shares no coastline with the strait itself, but it routes a large share of its southern crude oil exports through those waters.
At the lowest point, exports fell to just 200,000 bpd. The IMF responded by forecasting a 6.8% economic contraction for Iraq.
Reserves drained to cover the gap
To keep paying government salaries, Baghdad turned to the central bank's reserves. Those reserves fell from about $102 billion at the start of the conflict to around $86 billion by late June 2026 — $16 billion drained in roughly four months. Iraq also reportedly paid significant transit fees to Iran as it worked to restore export volumes, adding to that drawdown.
Exports climb back, but not all the way
By September 2026, Iraq's exports had climbed back above 3 million bpd through alternative routes, including pipeline capacity through Turkey — an avenue complicated by long-running disputes over the Iraq-Turkey pipeline.
Source: Crypto Briefing
Trading involves risk.
Risk Disclaimer
