Iraq struggles to pay public salaries as Strait of Hormuz crisis deepens

Iraq faces a severe financial crisis as oil exports plummet from 100 million barrels in February to around 32 million in May and June due to the Strait of Hormuz closure. Public employees reportedly haven't received July salaries, and the Finance Ministry warns of further delays. The country, heavily reliant on oil, is offering discounts on Basra crude and seeking alternative export routes.

Iraq is struggling to pay public sector salaries as the closure of the Strait of Hormuz continues to cripple its oil exports, which plunged from 100 million barrels in February to around 32 million in May and June, according to figures from the Oil Ministry. Many public employees reportedly have not received their July salaries, and a senior ministry official warned that if the disruption continues, salaries will not be paid on time. The Finance Ministry spends approximately $6.5 billion a month on salaries, pensions, and social welfare. Iraq's economy is heavily dependent on oil, which accounts for 90% of government revenue and 95% of export earnings. To mitigate the impact, Baghdad has renewed a one-year transit agreement with Turkey for 750,000 barrels per day and is offering discounts of nearly $30 per barrel on Basra crude to attract buyers. Oil expert Asem Jihad noted that the discount size reflects risk levels, not a production surplus. The crisis threatens recent poverty reduction progress, which saw poverty fall from 23% to 17.5% over three years.