18 hours ago
Iraq warns of economic fallout: Iran-Israel war boosts oil prices
Shafaq News/ Iraq is benefiting from a short-term surge in oil prices driven by the Iran-Israel conflict, but remains economically exposed if the escalation broadens, a senior government adviser warned on Saturday.
Mudhir Mohammed Saleh, the Prime Minister's economic and financial adviser, told Shafaq News that Iraq sits on a 'sensitive geopolitical and economic fault line,' cautioning that any deeper slide into conflict could place the country at direct risk.
Despite the dangers, he noted that the current hostilities have lifted crude prices by over $10 per barrel, returning them to levels seen at the start of the year. 'The war has created a positive oil shock in terms of pricing,' Saleh said.
He explained that prior to the outbreak of the conflict, global energy markets had been declining due to trade tensions between the United States and China, though the Iran-Israel conflict reversed that trend, reviving global oil demand and stabilizing Iraq's revenue outlook—assuming the war remains contained.
Saleh flagged the energy sector as the most sensitive to geopolitical crises, highlighting its outsized role in shaping global market volatility. However, he warned that the conflict has already disrupted regional logistics, particularly maritime shipping in the Gulf.
'The external shock is driving up transport and insurance costs,' he said, adding that Iraq now faces broader inflationary pressure due to rising logistics expenses and supply chain uncertainty. He urged a national review of storage, delivery routes, and food security measures.
Investor confidence could also take a hit if the conflict drags on, he added, citing increased financial caution among foreign stakeholders operating in Iraq.
His comments come as multiple Iraqi aviation officials confirmed that the country is losing millions of dollars daily following the complete closure of its airspace with the beginning of the Iran-Israel war.
Prior to the shutdown, around 700 aircraft—passenger and cargo—crossed Iraqi skies each day, generating an average of $450 per passenger flight and $700 per cargo flight, according to navigation data.
Since June 13, Iran and Israel have exchanged drone and missile attacks across multiple territories in the Middle East, raising fears of a regional war despite repeated international calls for de-escalation.
