DINAR GURUS UPDATE: Iraq’s monetary situation is strong!!! @DINARREVALUATION

 

Trump's potential sanctions on Iraq could shake global oil markets, S&P, 28 nov

 Trump's potential sanctions on Iraq could shake global oil markets, S&P

Shafaq News/ US President-elect Donald Trump is considering a maximum pressure sanctions campaign on Iraq, OPEC's second-largest oil producer, as part of efforts to curb Iran's influence, sources familiar with the discussions told S&P Global Commodity Insights.

The proposed measures, which mirror the stringent sanctions already imposed on Iran, could target Iraq’s crude oil production and exports. According to S&P Global Commodity Insights, Iraq produces over 4 million barrels per day (b/d) of crude oil, with exports averaging 3.6 million b/d.

Focus on Iran-Linked Entities

The sanctions may not directly restrict Iraq's oil exports but could focus on Iran-aligned entities and individuals, including figures within Iraq’s state oil marketer SOMO, said Bob McNally, head of the Washington-based consultancy Rapidan Energy.

Sources indicate that Iraq’s waivers to import Iranian gas and electricity could also be revoked. Such a move would exacerbate Iraq’s energy crisis, as the country relies on Iranian imports to offset frequent power outages.

“I’ve been advising clients since spring that a Trump 2.0 government would likely target Iraq's increasingly pro-Iranian government for sanctions,” McNally told S&P, though he added that the focus might be limited to specific actors rather than broad oil export restrictions.

Strained Energy Ties

Iraq's dependency on Iranian energy was highlighted on Nov. 24 when Iran slashed its gas exports to Iraq, cutting supplies from 25 million cubic meters per day to 7 million, resulting in a loss of 5.5 gigawatts of electricity for Iraq.

This dependency, coupled with Iran-aligned militias' growing influence in Iraq’s oil sector, has fostered a “gray market” trade in crude oil. According to Commodity Insights, this trade has generated millions of dollars in illicit revenues for Iranian-backed groups embedded in SOMO and the oil ministry.

Implications for Global Markets

Sanctions on Iraq could have widespread repercussions, particularly for China and India, the largest buyers of Iraqi crude. In October, China accounted for 41% of Iraq’s seaborne crude exports, while India took 28%, according to Commodity Insights data.

Punitive measures would also complicate Iraq’s efforts to diversify its export markets, including expanding sales to Europe and Africa. Iraqi Foreign Minister Fuad Hussein recently highlighted these ambitions but noted uncertainty over how sanctions might affect them.

Domestic and Global Challenges

Iraq’s economy is heavily reliant on oil exports, which generate 95% of government revenue. In 2022, net oil revenues reached $131 billion. Any sanctions could chill Western investment in Iraq’s energy sector, a critical component of its plans to increase crude output to 7 million b/d by 2027.

Trump’s potential sanctions could also impact US attempts to counter China’s growing influence in Iraq. Chinese firms already operate a significant share of Iraq's oil and gas development projects, far outpacing their American counterparts.

Broader Geopolitical Moves

The incoming Trump administration’s stance on Iraq aligns with its hardline approach to China and Iran. In 2018, Trump withdrew the US from the Iran nuclear deal, citing Tehran’s support for terrorism and pursuit of nuclear weapons.

In 2011, Trump declared his opposition to leaving Iraq vulnerable to Iranian control, telling The Wall Street Journal, "I would not leave Iraq and let Iran take the oil."

The Trump transition team and Iraqi Prime Minister Mohammed Shia al-Sudani’s office did not immediately respond to requests from S&P for comment.

DINAR GURUS UPDATE, 28 NOV

 DINAR GURUS UPDATE

Summary

Iraq’s monetary situation is strong, with increased reserves supporting exchange rate stability, while updates on bond auctions and budget amendments indicate economic progress.

Highlights

• 📈 Al-Alak states Iraq’s monetary situation is excellent, supported by over $110 billion in reserves.
• 💸 Pompey Peter discusses bond auctions aimed at stabilizing the economy and encouraging local investment.
• 🛢️ Mark Z highlights Kurdistan’s potential to add $1 billion in revenue through oil exports, signaling progress in the HCL agreement.
• 🔒 Frank 26 emphasizes the need for security and stability to implement a new exchange rate effectively.
• 🌐 Militia Man mentions banking reforms aimed at integrating Iraq’s banking system with global markets.
• 🔄 Economic changes will require an effective exchange rate to support integration, as previous rates have not allowed this.
• 📊 The emphasis on reserves and stability suggests a potential for currency revaluation in the near future.

Key Insights

• 📊 Strong Reserves: Iraq’s reserves exceeding $110 billion provide a solid foundation for economic stability and potential currency revaluation.
• 💵 Investment Opportunities: The bond auctions present a unique opportunity for citizens to invest, offering attractive interest rates and enhancing local economic participation.
• 🛢️ Kurdistan Oil Revenue: The Kurdish region’s oil exports could significantly boost government revenues, implying a positive trend in regional economic cooperation.
• 🔍 Need for Security: Achieving a new exchange rate hinges on the restoration of security and stability within Iraq, which is vital for investor confidence.
• 🌍 Global Integration: The proposed banking reforms aim for integration with global markets, indicating a shift towards a more competitive and compliant banking system.
• ⚖️ Effective Exchange Rate: A real effective exchange rate is necessary for genuine economic progress, as past rates have hindered market integration.
• ⏳ Potential for Revaluation: The current economic indicators and reforms point towards a potential currency revaluation, which could change the financial landscape in Iraq.

WALKINGSTICK: IRAQ WILL USE PETRO DINAR IN ALL OIL SALES : EVERYONE WILL ONLY USE THE IQD IN IRAQ

 

Parliamentary Finance Committee discusses amending the budget law for approval, 28 nov

Parliamentary Finance Committee discusses amending the budget law for approval

The Parliamentary Finance Committee revealed its vision on the draft first amendment to the Federal General Budget Law for the fiscal years (2023-2024-2025), which the House of Representatives completed its first reading in its session on Tuesday.

Member of the committee, MP Jamal Kocher, stated that the Finance Committee discussed the non-oil revenues file, and the draft amendment to the federal general budget law for the three fiscal years, related to maximizing revenues, as well as re-correcting the estimated costs of extracting oil from fields within the Kurdistan Region.

He explained, "The draft amendment sent by the government only includes Article 12 related to the costs of producing oil in the Kurdistan Region, and does not include amending any other article in the budget," indicating that, "There is still a need to collect detailed data with numbers and tables to ensure the approval of the appropriate amendment."

DINAR REVALUATION REPORT UPDATE: A NEARLY COMPLETE CENSYS, A SUSPENDED DEAL WITH CHINA, CHANGE IN THE CURRENT DINAR RATE ETC, 28 NOV

DINAR REVALUATION REPORT UPDATE

Summary

Iraq’s current developments include a nearly complete census, a suspended deal with China, and updates on the Iraqi Dinar’s valuation and self-employed tax credits.

Highlights

• 📊 Census nearly complete with Iraq’s population over 45 million.
• 🇨🇳 Iraq suspends $10 billion deal with China, impacting regional dynamics.
• 💰 Self-employed individuals may receive tax credits before Christmas.
• 📉 Current Dinar price at 1,155,000 to 100 USD in Baghdad.
• 🏦 New banking mechanisms set to improve Iraq’s financial operations.
• 🚀 Positive monetary outlook with the Central Bank’s ongoing developments.
• 🎉 Celebrations anticipated for successful banking transitions by early 2024.

Key Insights

• 📈 The completion of Iraq’s census reveals a significant population increase, indicating potential for economic growth and resource allocation.
• 🌍 The suspension of the China deal suggests Iraq’s desire for sovereignty and careful navigation of international relations, especially with the US.
• 🎁 The self-employed tax credit highlights financial relief opportunities for many affected by the pandemic, providing much-needed funds before the holidays.
• 💵 The Dinar’s current valuation indicates a stable yet cautious financial environment, affecting investment and trade.
• 🔄 Iraq’s new banking mechanisms aim to enhance efficiency in financial transactions, fostering domestic and international investment.
• 💼 The Central Bank’s positive monetary position suggests strengthening economic policies that could benefit the Iraqi Dinar in the long run.
• ⏳ The transition to improved banking operations is on track, with significant milestones expected by early 2024, which may further stabilize the economy.

DINAR REVALUATION REPORT UPDATE: A NEARLY COMPLETE CENSUS, CHANGE IN THE CURRENT DINAR RATE ETC