Oil: Iraq’s “UNO Card”
Iraq has long relied on oil as the primary driver of its economy, especially following the fall of the previous regime in 2003. Oil has been both a blessing and a curse for Iraqis. On one hand, it fuels government spending, attracts investment, and sustains public sector employment. On the other, it overshadows all other sources of income and has hindered the development of a diversified economy.
Today, oil accounts for roughly 85–90% of government revenue, making Iraq heavily dependent on a single resource to sustain its economy and the livelihoods of its population. This level of dependence creates a fragile system, any disruption in oil production or exports can have immediate and severe consequences.
Iraq already faces multiple internal challenges, including weak public services, water scarcity and drought, internal displacement, and ongoing security concerns. Under normal circumstances, oil revenues help contain and manage these issues. However, if oil exports were significantly disrupted, these challenges would not only resurface but intensify rapidly.
A major risk lies in regional instability, particularly tensions involving Strait of Hormuz a critical passage through which a large portion of the world’s oil supply flows. Any closure or restriction of this route would severely impact Iraq’s ability to export oil, even though Iraq itself is not directly on the strait.
In the short term, such a disruption could trigger immediate fiscal stress within days, limiting the government’s ability to pay salaries and fund essential services. In the long term, prolonged export interruptions would cripple economic growth, discourage investment, and risk pushing the country toward systemic instability.
Ultimately, oil functions as Iraq’s “UNO card” a powerful asset that can sustain the country, but also a single point of failure. Without serious efforts to diversify the economy and address structural corruption, Iraq remains vulnerable to shocks that could rapidly escalate into economic crisis.