Erbil, Kurdistan Region - Iraq's oil production capacity has fallen to below 2003 levels in recent days and its exports via the Strait of Hormuz has completely stalled despite ongoing negotiation with the Iranian side to allow Baghdad to export its oil. Prior to February 28, when the US and Israel launched a massive air campaign against Tehran, Iraq had exported 3.5 million barrels per day (bpd) from its southern fields though the Strait of Hormuz at around $65-72 dollars per barrel and around 50,000 bpd from the Kurdistan Region.
After Tehran closed the Strait of Hormuz, Iraqi exports via the
chokepoint dropped to zero and now the only avenue to export to
international markets is through the Kurdistan Region pipeline to the Turkish port of Ceyhan. If the Strait of Hormuz remains closed and other export routes such as Syria and Jordan are not quickly activated to increase exports, then this month's export volume will be limited to approximately 300,000 bpd (250,000 bpd from Kirkuk and 35,000 - 40,000 bpd from Kurdistan fields)
With oil revenues dropping by nearly 90%, the question that is being asked is, will Iraq be able to pay its bloated public sector salaries for the rest of 2026 and beyond if the war continues? Kirkuk crude oil sells at a premium of $2 per barrel over Brent in European markets and $1.50 in American markets according to the Middle East Economic Survey MEES. However, Kurdistan Region crude exported to Europe sells at a $4.70 per barrel discount to Brent, and $5.10 in American markets.
With the current price of Brent oil futures standing at around $105 bpd, exporting one barrel today is equivalent in value to almost exporting two barrels at early-2026 prices. This is precisely why Iraq must increase its export volumes, even if by tanker.
Iraq's Monthly Oil Export Volumes and Revenue — January 2011 to February 2026
Over the past 15 years, Iraq has faced several months of sharp revenue decline for various reasons. During the early months of the COVID-19 outbreak in 2020, April of that year brought in only $1.5 billion revenue, with total oil revenue for the whole year standing at $41.9 billion.
Four years earlier, the revenue dropped to $2 billion in the early months with total revenue for the whole year, 2016, standing at $43.5. In both of those years, daily oil exports were at their lowest — in April 2020, for instance, Iraq exported 3.43 million barrels per day, but the price had fallen to $15 per barrel.
What makes the current situation different from previous revenue downturns is that this time the cause is not falling prices but the loss of export routes. According to Iraq's Ministry of Finance data, oil covered 88% of total government expenditures in 2025, with 12% coming from non-oil revenue.
