Critical Economic Outlook for Iraq
On March 4, 2025, economist Nabil Al-Marsoumi expressed concerns regarding a looming financial crisis in Iraq. He highlighted that the nation’s net oil revenues are projected to cover only salaries, raising alarms about fiscal sustainability.
In a social media commentary, Al-Marsoumi noted, “Oil prices have declined to $70 per barrel following U.S. pressure that led OPEC Plus to shift away from its voluntary production cuts of 2.2 million barrels.” He anticipated that oil production would increase monthly, averaging 120,000 barrels per day for 18 months starting in April.
He further elaborated that Iraq’s share of this production increase would amount to 12,000 barrels per day, suggesting that the price for an Iraqi oil barrel could settle around $67. Al-Marsoumi estimated total oil revenues to reach 108 trillion dinars, with net revenues—after accounting for licensing company expenses—amounting to 95 trillion dinars.
He reiterated that these net revenues would solely suffice for covering salaries and social safety nets. As a result, the finance ministry may encounter significant challenges in managing fiscal resources to match rising public expenditures. This could compel the government to resort to borrowing, both domestically and internationally, to bridge the expanding deficit.
Recent analysis has identified that Iraq is currently under financial strain in 2025 due to dwindling oil prices. This scenario necessitates the implementation of more stringent financial policies aimed at preserving economic stability.
Given an anticipated budgeted oil price of $70 per barrel and an export level of 3.5 million barrels per day, expected daily revenues would total approximately $245 million. Annually, revenues could reach around $89.4 billion. However, a decrease in oil prices to $60 per barrel would reduce annual revenues to $76.65 billion, resulting in a projected $12.75 billion loss. This shortfall stands to exacerbate the fiscal deficit and exert additional pressure on Iraq’s economic framework.
| Parameter | Value |
|---|---|
| Current Oil Price | $70/barrel |
| Expected Daily Oil Production Increase | 120,000 barrels |
| Iraq’s Daily Oil Production Increase | 12,000 barrels |
| Total Estimated Oil Revenues | 108 trillion dinars |
| Net Oil Revenues | 95 trillion dinars |
| Projected Annual Revenue at $70/barrel | $89.4 billion |
| Projected Annual Revenue at $60/barrel | $76.65 billion |
| Projected Annual Revenue Loss | $12.75 billion |
The evolving financial landscape presents significant challenges for Iraqi policymakers. Strategic measures will be essential to navigate these turbulent waters and ensure fiscal viability in the face of fluctuating oil prices.
