Baghdad faces pressure to cut spending as oil prices slide

Shafaq News – Baghdad / Washington

Iraq may have to rein in public spending after oil prices fell well below the level needed to balance its budget, S&P Global Commodity Insights said on Sunday.

Brent crude is trading near $65 a barrel, far short of the $95 Iraq requires to avoid a deficit. The country, which relies on crude for almost all state revenue, could be forced to delay or scrap infrastructure and construction projects if prices remain depressed, the agency noted in a report.

The International Monetary Fund (IMF) estimated last year that Iraq’s fiscal break-even stood at $84 per barrel in 2024, one of the highest in the Middle East. It also reported that Iraq’s non-oil economy contracted 9% in 2023, with growth projected at less than 1% in 2024.

S&P warned that financially weaker producers such as Iraq are especially vulnerable, with fiscal strains raising the risk of unrest and threatening political stability.

Read more: Iraq’s budget: political fiscal gaps threaten national stability in 2025.