At a Glance

• Oil benchmark is set below market prices
• Salaries and pensions remain protected
• The Strait of Hormuz risks are complicating budget planning
• A supplementary budget is possible if revenues rise

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Iraq’s 2027 draft budget is being prepared with a conservative oil price benchmark as the government seeks to shield public finances from energy market volatility and regional geopolitical risks.

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Key Statements and Focus Area

• Mazhar Muhammad Saleh, Financial Advisor to the Prime Minister: The price per barrel in the 2027 draft budget is expected to range between $50 and $60.
• Saleh on complications: tensions surrounding the Strait of Hormuz have complicated budget planning.

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Saleh stated that the government has set the benchmark below current market prices as a precaution against potential declines in global oil prices.

The measure is intended to provide greater protection against energy market volatility and unexpected changes in Iraq’s oil revenues.

Public sector salaries, wages, allowances, and pensions have been designated as key priorities in the draft budget.

Social protection funds are also included among the government’s protected financial commitments.

The government has said it will not compromise on payments to wage earners and low-income groups under the 2027 budget.

About the risks of the Strait of Hormuz, Saleh said that the waterway is particularly important for Iraq because disruptions to maritime trade can directly affect the country’s ability to export crude oil and generate revenue.

Budget projections indicate that Iraq could resume exports of more than 3 million barrels per day once the Strait of Hormuz crisis is resolved.

The government is also preparing for the possibility of stronger-than-expected revenues during 2027.

If revenues increase substantially by the middle of the year, authorities will prepare a supplementary budget to finance additional expenditures.

Saleh described the 2027 budget as one of the most complex draft bills in Iraq’s history, citing the current regional conditions and associated economic risks.

FYI

Iraq relies on crude oil exports for roughly 90% of its total state revenue, making its entire economy and public sector payroll highly vulnerable to market fluctuations and transit bottlenecks.

According to the IMF and World Bank, Iraq's actual fiscal breakeven oil price, the selling price per barrel needed to balance the national budget without incurring a deficit, typically sits much higher, often between $80 and $90 per barrel.

Setting a low baseline price of $50–$60 per barrel in the budget is a standard risk-mitigation strategy to avoid structural spending shocks; however, if real-world prices or export volumes drop significantly below budget forecasts, Iraq historically relies on central bank reserves, domestic borrowing, or freezing public investment projects to plug the funding gap.

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