> ## Content Index
> Fetch the complete content index at: https://www.oiloutlook.com/llms.txt
> Use this file to discover other available public pages before exploring further.

# Iraq Cuts the Value of Its Currency as War Chokes Its Oil Sales
- URL: https://www.oiloutlook.com/iraq-cuts-the-value-of-its-currency-as-war-chokes-its-oil-sales/
- Published: 2026-10-07T16:55:39.000Z
- Updated: 2026-10-07T16:55:39.000Z
- Author: Jeff Showalter

Iraq devalued its currency on Wednesday, setting the dinar at 1,520 per U.S. dollar, roughly 14.5% below the old official rate, according to Reuters. Oil pays most of Iraq's bills, and the war around the Strait of Hormuz has sharply reduced how much crude the country can get to market.

The cabinet approved the new rate on Tuesday, and it took effect Wednesday. Normally, an oil producer would be cashing in with Brent still above $100 a barrel. Iraq isn't. The problem is not the headline oil price. It's how many barrels the country can actually sell.

More Dinars for Every Oil Dollar

Iraq sells its crude in dollars but pays much of its domestic spending in dinars. Weakening the currency means each dollar of oil revenue converts into more local currency, giving Baghdad more room to cover spending at home.

Iraqi analyst Mohammed al-Saffar told Reuters it "gives the government more dinars for each dollar of oil revenue, but raises import costs and reduces households' purchasing power."

So the government gets some relief, while Iraqi consumers face higher prices for imported goods.

The Problem Is Volume

Iraq has few export options outside the Strait of Hormuz, and the disruption has hit sales hard. Exports, measured in barrels per day (bpd), have fallen well below prewar levels.

- Before the war: more than 3.6 million bpd
- August: about 2.34 million bpd
- Late September (southern exports): about 2.6 million bpd

Baghdad has also been cutting prices to keep crude moving. State marketer SOMO offered September barrels at discounts of $15 to $20.80 a barrel, depending on destination. Trading house Vitol bought at least 25 million barrels for September loading, with buyers taking on the risk of getting the crude through Hormuz.

A Budget Built on Recovery

Iraq's draft 2027 budget is based on $58 oil, far below current prices. It calls for spending of 217 trillion dinars, about $166 billion, and projects a deficit of more than 40 trillion dinars. It also assumes exports of around 4 million bpd, including crude from the Kurdistan region.

Baghdad had reportedly been considering a new exchange rate between 1,400 and 1,500 dinars per dollar. It ultimately went further.

That gap tells the story. Iraq can have $100 oil and still come up short if it cannot ship enough barrels, or has to discount them heavily just to find buyers.

Sources:

- Reuters via Investing.com, Iraq devalues dinar to 1,520 per US dollar: [https://ca.investing.com/news/forex-news/iraq-devalues-dinar-to-1520-per-us-dollar-state-news-agency-says-4869013](https://ca.investing.com/news/forex-news/iraq-devalues-dinar-to-1520-per-us-dollar-state-news-agency-says-4869013?ref=oiloutlook.com)
- OilPrice.com, Iraq Devalues Dinar 14.5% as Hormuz Disruption Drains Oil Revenue: [https://oilprice.com/Latest-Energy-News/World-News/Iraq-Devalues-Dinar-145-as-Hormuz-Disruption-Drains-Oil-Revenue.html](https://oilprice.com/Latest-Energy-News/World-News/Iraq-Devalues-Dinar-145-as-Hormuz-Disruption-Drains-Oil-Revenue.html?ref=oiloutlook.com)