AGP Executive Report

Border Trade: Baghdad has ordered an investigation into Maysan’s council chief after he threatened civil disobedience over the Al-Sheeb crossing closure. The shutdown has disrupted trade and livelihoods, while some Iraq-bound trucks are diverting through Iran’s Mehran crossing. Oil & Budget: A prolonged Hormuz shutdown could cut Iraq’s oil revenues by 80%. The proposed 2027 budget projects 217.2 trillion dinars in spending against 174.2 trillion in revenue, leaving a 43 trillion dinar gap; its submission is delayed until November 15 amid a dispute over Kurdistan’s share. Industry: Jetour and local distributor Harlem Group signed an MoU for vehicle assembly in Zakho, but investment and production plans are not yet detailed. Aviation: Fly Erbil has secured an Iraqi air operator’s certificate, clearing the way to expand domestic and international routes. Regional Cooperation: Jordan and Iraq say they want to move joint projects in energy, industry, transport, trade and logistics into implementation.

Oil and Budget Risk: A renewed Hormuz shutdown could slash Iraq’s oil revenues by up to 80%, threatening salaries and public services. Iraq recorded a $20 billion deficit in the first eight months of 2026, and an adviser estimates oil must average about $86 a barrel to balance the budget. Border Trade: Parliament is investigating the closure of Al-Sheeb crossing with Iran as protests grow over its impact on livelihoods and prices. Restrictions have diverted Iraq-bound trucks to Mehran, while poor roads and limited rail links add to freight delays. Erbil-Baghdad Dispute: Talks on Kurdistan’s budget share and energy entitlements ended without agreement, leaving key questions over revenues, oil exports and public-sector funding unresolved. Investment and Infrastructure: Iraqi ports officials reviewed Japanese loan-funded projects, including a proposed floating dry dock and ship-repair city. Separately, plans are advancing for Chinese construction-material showrooms across Iraq and a car-parts assembly plant in the Kurdistan Region.

2027 Budget: A deal remains elusive, with Baghdad’s proposed 217 trillion-dinar budget still under revision and the Kurdistan Region’s share disputed: a parliamentary estimate puts it at 6%, while Erbil argues for 14.14% based on its reading of the census. Al-Sheeb Crossing: Parliament is investigating the Iran border closure as Maysan protests grow. Officials warn of rising food prices and disruption to oil-company traffic; the provincial council has threatened civil disobedience if the crossing stays shut. Oil Sales: Iraq reportedly sold 10 million barrels at discounts of $25–$28 a barrel. Oil exports brought in $37.39 billion in the first nine months of 2026. Trade Links: Iraqi Line has resumed commercial shipping to the UAE, with its Basra vessel arriving at Umm Qasr from Jebel Ali and offering traders another cargo route. Foreign Currency: Central Bank dollar sales rose 8.8% in September to $4.02 billion, bringing sales for the first nine months to $39.29 billion.

Oil Investment: Iraq is courting Chevron and ConocoPhillips for new export routes, with about $60 billion in announced deals still dependent on signed contracts and pipelines. The oil minister also urged faster purchases of tankers to protect exports amid Strait of Hormuz disruptions. Budget Strain: A reported approach to the IMF for a possible loan has raised questions about Prime Minister Ali al-Zaidi’s pledge to avoid borrowing. Baghdad is also seeking $2.5 billion in dollar shipments as cash shortages delay salary funding. Trade Links: The Al-Jamima crossing with Saudi Arabia has received funding for facilities and road upgrades, a step toward opening a new route intended to boost trade and local revenue. Oil Revenue: Iraq exported more than 533 million barrels in the first nine months of 2026, generating an estimated $37.4 billion, though deposits to the central bank were lower.

Oil and public finances: Iraq exported 533 million barrels in January–September, generating $37.4 billion in sales, though $33.5 billion reached central bank accounts. A liquidity shortage is delaying October public-sector salaries; payroll and welfare absorbed 82% of spending in the first half of 2026. Trade and currency: Imports jumped 72.6% to $72.3 billion in 2025, underscoring Iraq’s reliance on foreign goods. The dollar eased to about 168,900 dinars per $100 in Baghdad. Infrastructure: Grand Al-Faw Port has completed its breakwaters, with the submerged tunnel 98% finished. Funding is also approved to develop the Al-Jamima crossing and its road link to Samawah, paving the way for a second major land route to Saudi Arabia. Business and investment: Gulf Keystone and ShaMaran plan to merge into a producer focused on Iraqi Kurdistan, while Indian exporters aim to cut freight costs on Iraq-bound basmati rice by nearly 74%.

Oil Finances: Disrupted exports have driven Iraq’s oil revenue lower, leaving a projected $23 billion budget deficit and pressure to cover public-sector salaries. Prime Minister Ali al-Zaidi says Baghdad is seeking up to $2.5 billion in additional US dollar shipments to narrow the gap between official and market exchange rates. Oil Investment: Chevron has secured a year of exclusive talks on taking over operatorship of West Qurna 2 from Russia’s Lukoil, advancing its push into Iraq’s oil sector. Business and Banking: Iraq projects more than $2.5 billion in annual mobile and technology revenue, while bank deposits rose by $1.57 billion as lending contracted. Energy Transition: Iraq has removed import tariffs on solar systems, a move aimed at easing access to solar equipment.

Refinery Payments: South Korean contractors risk losing $755 million in unpaid bills and performance guarantees on Iraq’s $6.8 billion Karbala refinery. State oil projects company SCOP cites defects and missing tax documents, despite the refinery being handed over in 2023. Telecom Revenue: Iraq projects more than $2.5 billion in annual state revenue from mobile and IT services starting in 2027, up from zero, and is working to simplify customs for telecom equipment. Energy Investment: Iraq has signed an ExxonMobil deal to supply seawater to a major oilfield, while the Artawi gas project is reported 96% complete. The government has also removed import tariffs on solar systems. Banking: The Central Bank has barred a sanctioned Iraqi bank from dollar transactions. Separately, bank deposits rose by $1.57 billion as lending declined. Investment Climate: Political blocs in Dhi Qar are competing for control of the provincial investment commission, with appointments expected at an upcoming council session.

Economic Outlook: The IMF expects Iraq’s economy to contract by double digits in 2026 as the Iran war disrupts energy production, shipping and trade. It forecasts a sharp regional rebound next year, but says output will remain below pre-war expectations. Banking: Iraq’s central bank barred the sanctioned International Development Bank from all US-dollar transactions, following US allegations of links to Iranian networks. Separately, Iraqi bank deposits rose by $1.57 billion as lending shrank. Oil Investment: Baghdad is reshaping contract terms to attract major oil companies, with Chevron, BP and TotalEnergies pursuing large projects. ExxonMobil is also set to manage seawater supply to a major oilfield, supporting future production. Trade and Transport: Iraq launched a vessel-monitoring system in its territorial waters to improve shipping safety and commercial traffic. The move comes as regional shipping risks raise pressure to strengthen trade routes and port operations. Energy Transition: Iraq removed import tariffs on solar systems, lowering costs for equipment as the country seeks to expand power supply.

Energy and Investment: Iraq signed an ExxonMobil deal for the second phase of a seawater supply project serving a major oilfield. The government also removed remaining import tariffs on solar systems to lower costs and encourage renewable power. Trade and Transport: Iraqi Line has resumed Gulf container shipping after a 50-year break, and Iraq approved corn-silage exports as it seeks to grow non-oil trade. Economic Pressure: Domestic debt has topped $75 billion, while a lawmaker says dinar devaluation has lifted food prices by 30%. Rafidain Bank says it recovered more than $15 million in overdue loans. Regional Risks: Iraq’s planned $450 million gas-import project depends on the US-Iran conflict ending. Tanker attacks near Iraqi waters and Hormuz supply fears are adding pressure to energy markets.

Oil Investment: Basra Oil Company signed an agreement with ExxonMobil for a seawater project designed to supply 2.5 million barrels of water daily to oilfields, helping sustain production. Currency Pressure: Traders in Ramadi say the dinar’s devaluation has cut into funds and squeezed margins, with some businesses laying off staff or closing. Shipping and Trade: Iraq has revived commercial shipping after more than 50 years, with an Iraqi-owned cargo ship departing the UAE; a tanker incident and a drone sighting near Iraqi waters underline the risks to Gulf routes. Public Finance: Domestic debt exceeded 113 trillion dinars, rising by nearly 23 trillion in the first eight months of 2026, while foreign reserves reached $81.5 billion in August. Non-Oil Growth: Iraq approved exports of locally produced corn silage, while a Baghdad forum explored Czech investment and technology for water treatment and desalination. Banking: State-owned Rafidain Bank recovered more than 23.3 billion dinars and $280,000 in overdue loans during the third quarter.

Border Trade: Iraq says crossings with Iran are undergoing repairs, after reports that al-Sheeb and other routes were shut under US pressure. The disruption could affect passenger and freight flows between the neighbours. Shipping Risk: A tanker was reportedly struck by a projectile southeast of Al-Faw; its crew were safe and no damage was reported, though Iraqi sources had not confirmed the incident was in Iraqi waters. Public Finances: Central Bank reserves rose by $905 million in August to $81.5 billion, but remained 16% below their end-2025 level. Domestic debt reached 113.5 trillion dinars, up 25% since December. Oil and Investment: Gulf Keystone and ShaMaran agreed to a $601 million all-share merger, combining two Kurdistan-focused oil producers. Energy: Iraq scrapped tariffs on solar imports and approved a power deal, a move that could support renewable-energy investment.

Energy: Iraq removed customs duties on imported solar systems, approved a 600–1,000 MW electricity supply deal and allowed all crop imports through year-end. Shipping: Iran says the Strait of Hormuz will stay closed until the US meets its demands, while attacks on vessels are raising risks to regional oil flows. Iraq has launched a vessel-tracking system to improve maritime safety and manage commercial traffic. Prices: A lawmaker says food prices have risen about 30%, citing the gap between official and parallel-market dollar rates. Oil and investment: Iraq’s oil exports are nearing 3.4 million barrels a day, while Gulf Keystone and ShaMaran have agreed to a $601 million merger that will consolidate two Kurdistan-focused producers. Iraq estimates the regional conflict has cost it $60 billion in lost revenue. Digital finance: The KRG says its e-Psule platform has passed three million digital payment transactions as it targets collecting 90% of government revenue electronically by 2028.

Oil and Gas: Gulf Keystone and ShaMaran agreed a $601 million merger, creating a producer with about 53,000 barrels per day across Kurdistan and federal Iraq; completion is expected in mid-2027. Iraq’s oil exports topped 3.4 million barrels per day this month, though Baghdad says the regional conflict has cost the country $60 billion in lost revenue. Markets: Iraq Stock Exchange trading value fell 67% week-on-week to 2.56 billion dinars, despite a 6.8% rise in shares traded. Banking: State-owned Rasheed Bank expanded lending, offering eligible borrowers financing of up to 125 million dinars. Trade and Investment: Türkiye says the Iraq-Europe Development Road could generate $55 billion for its economy over a decade, while Iraq and Somalia are working to revive trade and livestock exports. Business Climate: Consultations are under way on reforming Iraq’s Companies Law, and the government plans 16 new LPG storage tanks.

Oil & Gas: Iraq says October crude exports have topped 3.4 million barrels per day, up from 3 million in September, as shipments move through Hormuz, Ceyhan and a Syrian pipeline. The recovery follows an estimated $60 billion in losses from war-related export disruptions. Energy Infrastructure: Baghdad plans 16 new LPG storage tanks with a combined capacity of 48,000 cubic metres to strengthen supply reserves. Trade & Transport: Somalia is seeking access to Iraq’s market for livestock exports, with both countries aiming to revive their joint committee and expand agricultural trade. Türkiye says the planned Development Road from Basra to Europe could generate $55 billion for its economy over a decade. Finance: Iraq has requested an IMF financing programme as it faces mounting economic pressures.

Bank Credit: Finance Minister Falih al-Sari ordered Rafidain Bank to resume public-sector lending and expand financing for private businesses, with faster applications and a new business-client branch. Industrial Investment: Officials in Diyala say 198 plots allocated for factories have instead become apartments and shops, costing the local economy industrial investment and jobs. Trade Routes: Türkiye says Iraq’s $20 billion Development Road could create about 70,000 jobs a year and add $55 billion to the Turkish economy over a decade. Economic Pressure: Baghdad says regional conflict has cost Iraq $60 billion, largely through lost oil exports, and has requested IMF financing as talks on support and reforms continue. Currency and Banking: The Central Bank launched a currency-replacement service, while the U.S. sanctioned an Iraqi bank over alleged Iran sanctions evasion.

Housing Investment: Iraq says it has released the first overdue payment to South Korea’s Hanwha for the Bismayah project, potentially clearing the way for construction to resume after a dispute over roughly $270 million in unpaid bills. Banking and Sanctions: The US Treasury sanctioned Iraq’s International Development Bank, alleging it helped move dollars to Iran and had links to Iran-aligned groups; the bank has rejected the accusations. Oil and Public Finances: Prime Minister Ali al-Zaidi ordered steps to raise oil production and revenue and called for a corruption probe at the Oil Ministry. Iraq has requested IMF financing as oil export disruptions deepen fiscal pressure, while reports put losses from the regional conflict at $60 billion. Investment and Infrastructure: A US-Kurdistan and US-Syria business delegation representing more than 30 companies met KRG Prime Minister Masrour Barzani to discuss trade and investment. Baghdad also opened Iraq’s first satellite ground station, aiming to expand digital infrastructure and connect regional networks.