Scenario Analysis of Macroeconomic Stability for the Iraqi Economy in the Face of the Strait of Hormuz Shock, 2024–2026
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Abstract
Abstract
This study examines the impact of a severe quantity shock the near-total halt of Iraqi oil exports through the Strait of Hormuz on macroeconomic stability in Iraq during 2026. The Iraqi economy is overwhelmingly oil-dependent, with oil revenues constituting approximately 85–90% of total government revenues and more than 90% of total exports, making it exceptionally susceptible to external shocks
The findings indicate that the near-total halt of oil exports through the Strait of Hormuz precipitated acute imbalances in public finances and the balance of payments, regardless of the concurrent rise in global oil prices from which Iraq could not benefit given the export halt. The study recommends the adoption of economic diversification policies and the establishment of financial stabilization mechanisms to mitigate economic vulnerability.
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