Iraq's crude oil exports have collapsed by more than 70% as the Iran-Israel conflict decimates regional shipping capacity and disrupts supply chains. The precipitous decline has created a severe fiscal crisis for the Iraqi government, which depends on petroleum revenue for approximately 90% of state budget income.
Baghdad's crude exports through the Strait of Hormuz and Persian Gulf shipping lanes have been severely restricted by heightened security risks, regional instability, and insurance surcharges. Major international buyers have reduced or suspended Iraqi crude purchases pending clarity on geopolitical de-escalation, forcing Iraq to either hold crude in storage or accept deeply discounted export terms.
The export collapse exacerbates Iraq's pre-existing fiscal strain and threatens essential government services, military operations, and civilian infrastructure. TankerMap vessel tracking shows a sharp decline in crude tanker activity in the Arabian Gulf relative to seasonal baselines, with Iraqi export terminals operating at minimal capacity. Without a diplomatic resolution or alternative shipping corridors, Iraq's economic outlook faces sustained pressure.