Strait of Hormuz disruption could reshape Iraq's oil-dependent economy, report says

BAGHDAD, Iraq — Disruptions at the Strait of Hormuz are creating a financial shock that could push Prime Minister Mohammed Shia' al-Sudani's government to rethink Iraq's heavy reliance on oil revenues, according to a report by the Gulf International Forum. The report found that export bottlenecks at the strait have exposed how closely tied public salaries, services and state projects remain to crude income, forcing authorities to reassess fiscal priorities. The study said the crisis could create pressure for a "necessity agreement" between Baghdad and Erbil to restructure their economic relationship, particularly given the growing need for alternative export routes through northern pipelines. It also suggested that Sudani's anti-corruption campaign could extend beyond legal proceedings and help rebuild public trust, while creating room to improve contracting systems, tighten oversight of state institutions and open space for private investment. The report noted that the value of deals announced during Sudani's recent visit to Washington would ultimately be judged by their ability to translate into concrete projects in energy, infrastructure, banking and technology. It concluded that Iraq could either return to the traditional model of waiting for higher oil prices, or use the current crisis to diversify its revenue base.