Following significant declines in the oil market, Iraq, the second-largest producer in OPEC, is set to lower its oil price expectations in the federal budget. Iraq's financial advisor to the Prime Minister, Mudher Saleh, indicated that the 2025 oil price forecast will be below last year's $80 per barrel, though specific details were not disclosed. This decision was previously delayed due to negotiations with oil companies over payment issues.
This year's oil prices have plummeted, exacerbated by U.S. President Donald Trump's comprehensive tariff policy. In April, benchmark Brent crude prices fell by 13%, sparking fears of an economic recession that could harm energy demand, especially in the U.S. and China, the world's largest oil consumers.
In mid-2023, Iraq's parliament approved a spending plan through 2025, initially assuming a crude price of $70 per barrel for 2023, with plans for review and adjustment in subsequent years. Currently, Brent crude prices have dropped below $65 per barrel. The decline in oil prices has placed immense pressure on Middle Eastern economies reliant on oil, particularly Iraq, which needs higher prices to support its war-affected economy.
Earlier this year, international oil companies operating in Iraq's semi-autonomous Kurdish region halted exports after a pipeline to Turkey's Ceyhan port was closed. These companies have been negotiating contract terms with federal and regional authorities to resume oil transportation. Saleh mentioned that the budget will soon be submitted to parliament for final approval.
