Hormuz strait closure could cut Iraq’s oil revenue $6 billion monthly: PM advisor

ERBIL, Kurdistan Region - The closure of the Strait of Hormuz could slash Iraq’s monthly revenue from $7 billion to $1 billion, Iraqi Prime Minister Mohammed Shia’ al-Sudani’s financial advisor said on Tuesday, as Tehran continues to threaten ships passing through the strategic waterway.

Following US and Israeli strikes on Iran on Saturday that killed dozens of senior officials, including Iranian supreme leader Ayatollah Ali Khamenei, Iran vowed retaliation, targeting several regional countries hosting US bases. The Islamic Revolutionary Guard Corps (IRGC) said Monday that the Strait of Hormuz has been closed, and any ship that attempts to enter would be targeted.

Sudani’s economic advisor, Mazhar Mohammed Salih, told Rudaw that disruptions to oil exports are costing Iraq between $200 million and $255 million daily. Even if oil prices reach $150 per barrel, under the current circumstances, Iraq’s revenue could fall from $7 billion to $1 billion, he said.

“The closure of the Strait of Hormuz is a severe complication for Iraq's economy, as it primarily relies on this waterway to export oil, and 94 percent of its oil is exported through the southern ports,” Salih warned.

He further anticipated that oil exports would drop from 3.4 million barrels per day (bpd) to less than 250,000 barrels if the waterway remains closed.

The top advisor to the Iraqi government pointed to the Kirkuk-Ceyhan pipeline as a partial solution, noting, “It has a capacity of 200,000 to 210,000 bpd and can be increased.” He further clarified that land exports to Jordan currently stand at 10,000 bpd.

Before the Kurdistan Region’s oil exports via the Iraq-Turkey pipeline were suspended in March 2023, when a Paris-based arbitration ruling favored Baghdad over Ankara, Erbil exported around 75,000 barrels per day of Kirkuk oil. Exports resumed in September 2025 following an agreement between Baghdad, Erbil, and international oil companies.

Iraq’s outgoing oil minister, Hayyan Abdul Ghani, told Rudaw on Wednesday that the country plans to export 50,000 barrels per day of crude from the Kirkuk oil fields through the Kurdistan Region’s pipeline to Turkey in the near future.

To fund employee salaries, ministry operations, and projects, Iraq needs to export 3.5 million barrels of oil daily.

The latest round of violence between Israel, the US and Iran has also taken a toll on the Iraqi dinar’s value against the US dollar. Since the start of the war, the dinar has traded at 1,550 per 1$ on the black market, up from around 1,520 before Saturday.

Salih said that Iraq’s primary source of the greenback comes from oil revenue held in the US Federal Reserve, and any drop in exports directly reduces the flow of dollars into the country.