Analysis

Various reasons have been cited to explain why Iraq’s oil and finance ministries publish different reports on the country’s oil revenues, including oil sale terms, the timing of revenue transfers, the authority of the Federal Reserve Bank of New York over Iraq’s oil revenues, and the inspection, auditing, and review mechanisms governing those revenues. While all of these factors play a role, the primary reason lies in the difference in accounting methods.

The recent visit of Kurdistan Region President Nechirvan Barzani to Baghdad carries far greater strategic weight than merely being confined in the negotiations to form Iraq's new government. It is, in essence, a reflection of the process of political realignment between Iraq's political forces and the Kurdistan Region in the shadow of the repercussions of the 2026 Iran war — and the sweeping transformations that have reshaped the Kurdish issue and Iraq's political future.

The 2026 Iran War is one of those events with the potential to reshape the geopolitical landscape of the second quarter of the 21st century in the Middle East, while simultaneously transforming the contours of the Kurdish issue. Although the war has not formally concluded, the United States and Iran remain suspended in a limbo between a "cold peace" and the prospect of a return to military confrontation. Whatever the outcome of this standoff, the forty-day conflict has already left its foundational imprints behind — in such a way that neither a future Iran will revert to its pre-war state, nor will the regional balances remain as they once were.

McDowall once described the geography of Kurdistan as a line of geopolitical friction situated between three regional power centers: the Mesopotamian plains, the Anatolian highlands, and the Iranian plateau. His argument suggests that whenever these powers come into conflict, Kurdistan is inevitably drawn into the flames of war. In reality, this pattern is not new; it has characterized earlier historical confrontations, including those between Persia and Rome, as well as Iran and Greece. The Iranian war of 2026 has once again demonstrated that geography can, at times, shape outcomes more decisively than political decision-making alone.

Syria’s oil and gas fields, including those in the northeast region (Rojava), have changed hands multiple times over the past 16 years. In late January, the country’s new government regained control of nearly the entire sector - about 95 percent - through a combination of conflict and an agreement with the Kurdish-led Syrian Democratic Forces (SDF).

Before the war, Iraq's goal was to reach a production of 6 million barrels of oil per day. Now that figure is becoming a dream, growing more distant day by day from the pre-war level of 4.5 million barrels per day - because Iran-backed Iraqi armed groups are targeting oil and gas fields in Iraq as a result of the ongoing war between the US and Israel against Iran, and foreign oil companies are withdrawing from Iraq one after another.

The risks to shipping through the Strait of Hormuz are now entering their sixth week in the shadow of the US-Israel war with Iran. In that time, the monthly volume of oil passing through the strait has collapsed from 440 million barrels to just 53 million, and yet the price shock the world was bracing for has not arrived.

Iraq's structured oil revenue system is set to be a financial lifeline, enabling the country to sustain government operations even as oil production collapsed and exports fell to less than 8 percent of normal levels in March.

The energy crisis triggered by the closure of the Strait of Hormuz — following the US-Israel war with Iran — has once again placed Syria and Turkey at the center of global energy discussions, this time as potential new export corridors for Iraqi oil and Qatari gas.

Iraq's oil production capacity has fallen to below 2003 levels in recent days and its exports via the Strait of Hormuz has completely stalled despite ongoing negotiation with the Iranian side to allow Baghdad to export its oil. Prior to February 28, when the US and Israel launched a massive air campaign against Tehran, Iraq had exported 3.5 million barrels per day (bpd) from its southern fields though the Strait of Hormuz at around $65-72 dollars per barrel and around 50,000 bpd from the Kurdistan Region.

Iran is allowing vessels not considered to belong to “enemies” to pass through the Strait of Hormuz, as traffic through the waterway has dropped to its lowest daily level in five years. A total of 111 vessels have passed during the current period of war, including 40 oil tankers.

As the war continues to escalate, Iraq and the Kurdistan Region have not only been caught in the geopolitical crossfire but are also facing growing threats to the very foundations of their economic stability. Oil exports remain the backbone of both Iraq’s national economy and the Kurdistan Region’s fiscal revenues. Yet the ongoing conflict is increasingly exposing structural vulnerabilities across the country’s energy sector. These vulnerabilities extend beyond the physical security of oil fields and export terminals to include the reliability of domestic transportation infrastructure, the safety of maritime routes, and the limited availability of alternative export corridors to global markets.

This article examines the US-Israeli military campaign against Iran in 2026, tracing its evolution through three distinct stages: pre-war diplomacy, a sustained air campaign, and the reported involvement of Kurdish opposition forces in ground operations. Drawing on primary reports and media accounts, it highlights the strategic interplay between diplomacy and military action, revealing how parallel negotiations and covert preparations shaped the conflict. The analysis situates these developments within the literature on coercive diplomacy, compellence, and proxy warfare, emphasizing the deliberate ambiguity in US war aims and the use of third-party actors to achieve strategic objectives while minimizing direct costs. The study also considers regional and domestic pressures, including Iran’s responses, Turkey’s concerns, and American public opinion, illustrating the complex dynamics that influence both the conduct and potential duration of modern military interventions.

On Sunday, Iraq’s Ministry of Oil convened a high-level meeting to review recent regional developments and their implications for the energy market. Officials stated that the discussions included an evaluation of the emergency response plan for the oil sector, as well as strategies concerning production and export operations for crude oil, natural gas, and petroleum products, all in light of ongoing security tensions in the region.

Iraq's Ministry of Finance monthly spending data reveal significant disparities across governorates that extend beyond the Kurdistan Region, affecting ministries, services and governorates nationwide. Operational and investment allocations vary widely from southern to central Iraq, while Kurdistan Region governorates and disputed areas such as Kirkuk received no funding from 2015 to 2025.

Both the ceasefire and the negotiations between the Syrian Democratic Forces (SDF) and the interim Syrian government have remained fragile. However, the most recent agreement between the two sides—reached on the 27th of January, 2026, and announced publicly on the 30th of the month—appears to represent an important turning point. The agreement has taken shape under the combined influence of developments on the ground and the broader political-military dynamics unfolding across the Middle East

Data published by Iraq’s Ministry of Finance provides an official view of how the country’s economy has been managed over the past decade, with one defining feature standing out clearly: the sustained and rapid expansion of public expenditure. This report is the first installment of a three-part series examining Iraq’s economic trajectory, based on the Rudaw Research Center’s monthly revenue and public expenditure dashboard covering all state institutions from 2015 to 2025.

In late 2025 and early 2026, Iran entered one of the most critical phases in its more than 46-year history since the establishment of the Islamic Republic. A new wave of protests has emerged, spreading to approximately 250 locations across 27 provinces. Although the number of participants appears lower than in previous protest movements, the speed and geographic breadth of their spread, combined with the severe economic pressure faced by ordinary citizens, make this wave particularly significant. However, economic hardship alone does not fully explain the current unrest. Broader structural and political factors are also at play, including declining public trust in the political system during what many perceive as a transitional period, as well as the impact of external political and military developments on Iran’s internal dynamics. The reimposition and tightening of international sanctions, statements by U.S. President Donald Trump regarding the possibility of intervention should protesters be killed, the growing risk of a renewed military confrontation with Israel, and the capture of the Venezuelan President, Nicolás Maduro, have all contributed, directly or indirectly, to shaping the current protest environment.

More than three months ago, a trilateral agreement was signed for exporting oil from Kurdistan Region fields through pipelines and selling it to global markets. According to the penultimate clause of the agreement, " The agreement will be effective for 30 days from the date of signing and will automatically extend until December 31, 2025. The parties can agree to extend the agreement for a longer period or terminate it prematurely."

In his most recent interview with the Iraqi News Agency (INA), the Prime Minister of Iraq presented a set of new economic figures that carry significant implications for the country’s financial outlook. However, these figures diverge markedly from the data published in official reports issued by the Ministry of Finance, the Central Bank of Iraq, and various international institutions.

Taken together, these developments highlight the diversification of Iraq's investment environment and the country's opening to the world's largest energy companies. However, the case of the West Qurna-2 oil field reveals a major structural weakness in Iraq's energy sector: its vulnerability to shifts in the relationships among global powers. It raises a critical question: if, one day, the United States were to impose sanctions on China and its energy companies, how would Iraq continue to produce oil and finance the state, given that around 90 per cent of government revenue still comes from oil exports?