Iraq is arab republic; OPEC+ chronic over-quota producer; oil revenues near 90% state income; Ceyhan pipeline non-hormuz backstop. Iraq is an Arab republic whose state finances depend almost entirely on oil, with pre-war output of roughly 4.5 million barrels a day accounting for around 90% of government revenue. Prime Minister Mohammed Shia al-Sudani leads a government that must balance that dependence against a security relationship with Washington, which keeps roughly 2,500 troops at Al-Asad and Erbil, and the

influence of the Popular Mobilisation Forces, an approximately 100,000-strong paramilitary network integrated into the state since 2014 but not fully controlled by it. Within OPEC+, Iraq is a chronic over-quota producer, repeatedly pumping above its allocated ceiling, which limits Baghdad's credibility when the group negotiates output cuts. Its Kirkuk-Ceyhan pipeline gives it a Mediterranean export route that does not depend on the Strait of Hormuz, a structural advantage most of its Gulf neighbours lack when Hormuz risk spikes.

Key Issues

Cross-border strikes

Saudi strikes inside Iraq anger Baghdad

Saudi Arabia struck targets inside Iraqi territory on 29 July, citing Article 51 of the UN Charter to justify the self-defence action, after drones launched from Iraq had been aimed at Saudi facilities. Baghdad responded the same day by cancelling a planned visit to Riyadh, a rare public rupture between two governments that have otherwise coordinated closely on the war.

The episode exposes the limits of Iraqi sovereignty under the war's pressure: Baghdad does not fully control the northern territory the drones were launched from, so it absorbs both the original attacks and the retaliation for them, on top of its exposure through the roughly 2,500 US troops stationed at Al-Asad and Erbil.

Pipeline bypass

Ceyhan gives Baghdad a route around Hormuz

The Kirkuk-Ceyhan pipeline is Iraq's own answer to the Hormuz blockade: a land route to the Mediterranean that never enters the strait Iran has fought to close. As of 22 June the line was running alongside Saudi Arabia's Yanbu pipeline at a combined 9 million barrels a day, still less than half of Hormuz's normal 20 million barrels a day capacity but the largest volume Iraq can move without touching the chokepoint.

The pipeline's history works against Baghdad here: a revenue dispute between the federal government, the Kurdish region and Turkey shut the line for most of 2022-2023, and the same dispute has stalled the 2026 ramp well below Iraq's own cabinet targets, so the bypass capacity Iraq can actually deliver is smaller than its nameplate figure implies.

Cross-border escalation

Its territory becomes a drone launchpad

Saudi air defences intercepted drones aimed at Eastern Province oil facilities and at Riyadh on 27 July that had been launched from Iraqi territory rather than Iran itself, extending the war's geography while Jordan, hit the same day, reported no casualties either.

The same day, separate drones struck camps in northern Iraq housing Iranian-Kurdish opposition fighters, territory Baghdad does not fully control, making Iraq both a launch pad for attacks on its neighbours and a target in its own right on the same news day. Two days later Saudi jets struck back inside Iraq, prompting Baghdad to cancel its planned Riyadh visit.

Common Questions

Reference

Who is the Prime Minister of Iraq?

Mohammed Shia al-Sudani has been Prime Minister of Iraq since October 2022, governing a Coalition government that must balance US military presence and Iranian-backed militia influence.Source: Iran Conflict 2026 briefing

What is Basra crude and who buys it in Europe?

Basra Medium is a medium-sour Iraqi export crude that competes with Urals in the European refining slate. European refineries previously configured for Russian crude hold residual preference for Basra-type barrels.Source: EIA, market data

What is the Popular Mobilisation Forces' role in Iraq?

The PMF are Iranian-backed militias formally integrated into Iraq's security forces after the 2014 ISIS campaign, numbering an estimated 100,000 fighters with close ties to Tehran. They operate freely on Iraqi soil, creating a sovereignty paradox for Baghdad: expelling them risks civil war, tolerating them risks US retaliation.Source: entity background

What US military bases are in Iraq?

The main US bases are Al-Asad Airbase in Anbar province and Erbil in the Kurdish region. About 2,500 US troops remain under an ongoing security arrangement.

What are the Popular Mobilisation Forces in Iraq?

The PMF (also known as Hashd al-Shaabi) are Iranian-backed militias formally integrated into Iraq's security forces after the 2014 ISIS campaign. They number an estimated 100,000 fighters and maintain close ties to Tehran, operating from Iraqi territory throughout the 2026 conflict.

How is Iraq exporting oil with the Strait of Hormuz closed?

Iraq negotiated bilateral transit for a Very Large Crude Carrier of approximately 2 million barrels through direct engagement with Tehran in May 2026, bypassing Persian Gulf Strait Authority yuan tolls in favour of political accommodation. Additional VLCC transits were under negotiation. Iraq had previously declared Force majeure on all foreign-operated oilfields when Hormuz closed in March 2026.Source: entity background

Did Iraqi militias shoot down a US aircraft in 2026?

Iraqi militias claimed responsibility for the KC-135 crash near Turaibil in March 2026 that killed six US personnel. CENTCOM said the crash was not caused by hostile fire; the Baghdad government condemned the claim.Source: CENTCOM

Why did Iran's foreign minister announce the Hormuz claim from Baghdad in June 2026?

On 28 June 2026, Foreign Minister Araghchi declared Iran's 'sole oversight' of the Strait of Hormuz from Baghdad, using Iraq's capital as the platform for a maximalist statement. The choice of Baghdad underscores Iraq's position as a venue it cannot control: the country hosts 2,500 US troops while Iranian-backed militias and Tehran's officials operate freely on the same soil.Source: Lowdown Iran Conflict 2026 Update 141

How is Iraq affected by the Iran-US conflict?

Iraq hosts US troops and Iranian-backed PMF militias simultaneously. It declared Force majeure on foreign-operated oilfields after Hormuz closure, then negotiated bilateral VLCC passage directly with Iran in May 2026 to partially restore oil revenues.Source: Iran Conflict 2026 briefing

Why does Iraq keep exceeding its OPEC production quota?

Iraq's federal budget is almost entirely dependent on oil revenues; it consistently produces above its OPEC+ quota to fund public spending. In mid-2026 Iraq remains chronically non-compliant even as group-wide output has collapsed 9.58 mbd below quota on Hormuz constraints.Source: European Oil Markets briefing

Did Iraq qualify for the 2026 FIFA World Cup despite the Iran conflict?

Iraq qualified for the 2026 FIFA World Cup, but airspace closures disrupted travel preparations. FIFA intervened with emergency Visa assistance to enable transit through alternative corridors for the Iraqi Football Association.Source: entity background

How has the Iran-US conflict affected Iraq's oil exports?

Iraq declared Force majeure on all foreign-operated oilfields in March 2026 after the Strait of Hormuz was blocked, halting exports and filling storage to capacity.Source: Iraqi oil ministry letter, 17 March 2026