Gasoline and dollar queues are the first signs... Is Iraq entering a tunnel of economic turmoil?
The ongoing conflict between the United States and Israel on one side, and Iran on the other, has quickly cast a shadow over the overall situation in Iraq, particularly the economic aspect.
Concerns related to energy markets and supply chains have resurfaced, with growing anxiety about the impact of any escalation of the conflict on oil exports, shipping routes, and the stability of the domestic market in a country almost entirely dependent on imports.
The exchange rate of the dollar has also seen a significant increase in Baghdad's Al-Kifah Street market, exceeding 160,000 dinars per 100 dollars, alongside a sharp rise in the prices of both foreign and Iraqi gold in the markets of Baghdad and Erbil. In a tangible indication of the "shock" spreading domestically, Iraqi cities witnessed signs of a fuel crisis.
For example, the city of Fallujah in Anbar province saw long queues at gas stations, revealing the public's sensitivity to any development that might be perceived as a direct threat to supply chains or transportation between provinces.
The government, for its part, attempted to offer reassurances to alleviate the confusion. The Ministry of Trade affirmed that the food situation in Iraq is "stable and under control," and that there are no indications of concern regarding the availability of food in the markets following the Israeli-American attack on Iran.-
Ministry of Trade spokesman Mohammed Hanoun stated that "the government has given great attention to the food security file in anticipation of emergency circumstances, and has worked during the past period to strengthen the strategic reserves of basic commodities, especially wheat, in addition to ration card items such as rice, sugar, and oil." He emphasized that "the stock is good and sufficient to meet citizens' needs within a plan aimed at ensuring continued supply and market stability, with daily monitoring of market activity to prevent exploitation and price hikes."
Economically, "energy sensitivity" appears to be the most prominent issue. Iraq may theoretically benefit from higher oil prices, but at the same time, it faces the risks of disruptions to export routes, shipping, and insurance, along with the accompanying pressure on internal stability and prices, especially if the war escalates to a stage where economic infrastructure or maritime routes are targeted.
What about the Strait of Hormuz?
Economist Safwan Qusay warns Al-Mada that "expanding the scope of the war in the Middle East to include economic targets and closing the Strait of Hormuz will lead to a rise in global oil prices, forcing Baghdad to confront the challenge of managing risks, not merely monitoring figures."
Qusay believes that "Iraq needs options to mitigate the potential shock, including reaching an understanding with Saudi Arabia on arrangements to secure supplies in case some routes are disrupted, or relying on the reserves of the Central Bank of Iraq to ensure the financing of public spending for a period that may exceed six months if the crisis enters a phase of severe pressure."
Qusay goes further, discussing logistical alternatives, such as "expanding export routes towards Turkey by utilizing the Kirkuk-Ceyhan pipeline and its capacity, with the possibility of boosting exports by truck to Jordan, Kuwait, or Turkey, depending on developments in the security and trade situation."
Warnings of a more dangerous scenario .
In this context, political analyst Mohammed Naanaa told Al-Mada that "Iraq must prepare for the repercussions and consequences of a war with Iran, especially if the war escalates or the Iranian regime loses control of the internal situation." He warned that the most dangerous scenario is the possibility of the war leading to widespread internal disintegration, which could open the door to large waves of displacement towards the Iraqi border.
Naanaa stressed the necessity of "taking all necessary precautions to confront potential challenges and threats, including administrative and security preparedness and the management of resources and services in the provinces near the front lines."
According to field observations, Iraqi markets remain in a phase of "anticipation and questioning" rather than an actual crisis. However, observers note that this phase could change rapidly if the war continues and expands, especially given the sensitivity of consumer sentiment towards fuel and basic commodities, and the potential for rumors to ignite excessive buying that would disrupt the market even if stocks are stable. link
