Iraq’s government is revising its oil price assumptions for the 2026 federal budget after a sharp decline in global crude prices widened pressure on public finances, according to an adviser to the prime minister.

Mazhar Mohammed Salih, the financial adviser to Prime Minister Mohammed Shia al-Sudani, said Iraq now expects to base its 2026 budget on an oil price ranging between $55 and $62 per barrel, reflecting current market conditions and international forecasts.

Salih said the revised estimate is based on economic analyses and projections by the Organization of the Petroleum Exporting Countries (OPEC), as well as assessments from several international financial institutions. Those forecasts suggest Brent crude prices will average within the same range next year, putting Iraq’s likely budget reference price at around $58.50 per barrel.

The move marks a significant adjustment from Iraq’s existing three-year budget framework for 2023–2025, which was built on an assumed oil price of $70 per barrel.

Salih attributed the recent downturn in oil prices to slowing global economic and industrial growth, linking it in part to U.S. trade policies introduced since President Donald Trump returned to office. The renewed trade tensions have weighed on global demand expectations, contributing to a sustained decline in energy prices.

Brent crude has fallen to around $58 per barrel in 2025, down sharply from roughly $82 at the start of the year, according to market data.

Oil revenues account for more than 90 percent of Iraq’s state income, making the budget highly sensitive to price fluctuations. A lower oil price assumption is expected to reduce projected revenues and could force the government to reassess spending priorities if prices remain subdued.

Iraq, OPEC’s second-largest producer, has repeatedly warned that prolonged weakness in oil markets poses risks to fiscal stability, particularly as the country faces rising public sector costs and reconstruction needs.