S&P affirms Iraq's sovereign credit rating at B-/B, flags difficult outlook

BAGHDAD, Iraq — S&P Global has affirmed Iraq's sovereign credit ratings at B-/B, citing a difficult outlook over the next 6 to 12 months amid the ongoing war in the Middle East and the closure of the Strait of Hormuz. The agency said Iraq's economy, which is heavily dependent on the oil sector, remains vulnerable to declines in export volumes through the key trade route. According to Reuters, S&P projected Iraq's oil production at 2.9 million barrels per day in 2026, a 28 percent decline from the prewar daily average of 4.0 million barrels in 2025. The ratings agency said pressure on Iraq's fiscal and balance-of-payments positions is expected to persist through the end of the year, noting that oil revenues account for more than 90 percent of budget revenues and merchandise exports. S&P also forecast a 15 percent contraction in Iraq's gross domestic product in 2026. The agency added that strong oil prices throughout the year could support fiscal revenue if a modest recovery in exports materializes in the second half of 2026.