Iran war squeezes Iraq’s economy as oil revenues fall and prices rise
Summary
Iraq is facing major economic problems because of the war between the US, Israel, and Iran, which has disrupted the flow of its oil exports and increased the cost and delay of imports. Oil makes up more than 90% of Iraq’s federal budget, and the loss of about $60 billion in oil revenue has hurt the country’s economy and caused prices to rise.Key Facts
- Iraq depends heavily on imports for food, medicines, appliances, and raw materials.
- Oil is Iraq’s main export and usually brings in enough money to pay for these imports.
- The war involving the US, Israel, and Iran began in late February and blocked trade routes, especially through the Strait of Hormuz.
- Iraq lost about $60 billion in oil revenue because it could not export about 90% of its oil via its normal routes.
- Supply chains are disrupted, causing longer delivery times and higher costs for goods from China and Turkey.
- The price of imported goods has risen by about 25 to 30 percent, forcing many stores to sell more local, often lower-quality, products.
- The Iraqi dinar has fallen in value against the US dollar, which increases the financial burden on consumers and businesses.
- Iraq’s oil revenue funds are held in a special US account and transferred to Iraq yearly under approval by the US president.
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