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Iraq has suffered an estimated $60 billion in losses from the Middle East war, Foreign Minister Fuad Hussein said on Thursday, as Iran’s blockade of the Strait of Hormuz disrupted the country’s oil exports.
Before the conflict, Iraq, an OPEC member, produced about four million barrels of oil per day and exported around 3.5 million barrels, most of it through the Strait of Hormuz from its southern ports.
Iran’s blockade of the strategic waterway forced Iraq to suspend most of its oil production because of limited storage capacity. The country had to rely on restricted exports through alternative routes, including trucks via Syria and pipelines through Turkey.
“Iraq has suffered losses estimated at around 60 billion dollars during the recent war between the United States and the Islamic Republic of Iran,” Hussein told his Italian counterpart in Rome, according to a statement from Iraq’s foreign ministry.
Iraq’s oil exports, which generate about 90 per cent of government revenue, recovered modestly last month following a sharp decline in production. The oil ministry reported exports of 2.6 million barrels per day between September 1 and 21.
However, the disruption has also reduced Iraq’s foreign currency reserves by $20 billion and driven up consumer prices, worsening the country’s economic difficulties.
To contain the impact, the Central Bank of Iraq devalued the dinar against the US dollar last week for the first time in more than three years.
Iraq depends heavily on foreign currency earnings from oil sales to finance imports, support the dinar and pay salaries to public sector employees and pensions to retirees.
The government says it is seeking to diversify the economy and reduce its dependence on oil by increasing the share of non-oil revenues from 10 per cent to 45 per cent by 2037.