Iraq Caught in Iran-US Crossfire
Analysis based on 8 articles · First reported Mar 13, 2026 · Last updated Mar 13, 2026
The escalating conflict in Iraq, with strikes on oil fields and disruptions to Gulf shipping, has severely impacted Iraq's oil exports, which account for over 90% of its state revenues. This threatens the Iraq===Iraqi dinar's value, potentially triggering inflation and widespread unrest, and creates significant uncertainty for global oil markets.
Iraq is caught in the crossfire of a regional conflict, facing strikes from both Iran and the United States. This has led to significant disruptions in oil exports, which are crucial for Iraq's economy, and threatens the government's ability to meet public-sector payrolls, risking widespread unrest. A parallel conflict has escalated between Iran-backed Iraqi militia groups and the United States, with near-daily drone strikes targeting American interests and retaliatory strikes by the United States. The situation is further complicated by a stalled political transition and a caretaker government with limited powers. Companies like ShaMaran Petroleum and HKN Energy have suspended oil output due to the strikes. The disruption to oil production and exports is expected to lead to a decline in the Iraq===Iraqi dinar's value and increased inflation, posing a severe threat to Iraq's stability and potentially impacting the broader Middle East.
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