Iraq Devalues Dinar 14.5% as Hormuz Disruption Drains Oil Revenue
Iraq Devalues Dinar 14.5% as Hormuz Disruption Drains Oil Revenue Iraqdevalued the dinar by 14.5% on Wednesday, setting the exchange rate at 1,520 per dollar after months of disruption to oil exports through the Strait of Hormuz cut into the government’s main source of revenue.
The cabinet adopted the new exchange-rate structure on Tuesday, with the changes taking effect Wednesday.
The decision set the Finance Ministry’s purchase rate at 1,500 dinars per dollar and the rate for sales by banks and non-bank financial institutions to end beneficiaries at 1,510 dinars per dollar.
Baghdad had beenconsidering weakening the dinarto between 1,400 and 1,500 per dollar as it prepared a 2027 budget with spending of 217 trillion dinars and a deficit exceeding 40 trillion dinars.
The new 1,520 rate goes beyond that range.
Oil sales provide the bulk of Iraq’s state revenue.
Iraq sells its crude in dollars and pays much of its domestic spending in dinars.
Economiststold Reutersthat the devaluation is a fiscal response to the drop in oil revenue, increasing the dinar value of the government’s dollar earnings while raising import costs and reducing household purchasing power.
Iraq has few alternatives to Hormuz for its crude exports.
Shipmentsfell to about 2.34 million bpd in August, from more than 3.6 million bpd before the war.
Southern exports recovered to about 2.6 million bpd by late September, but remained well below prewar levels.
Baghdad also cut prices aggressively to attract buyers.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
| Mazut M100 | $450/MT | -0.15% |
| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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