Iraq Builds 2027 Budget on $58 Oil—and a Very Large Deficit

Iraq's 2027 draft budget is predicated on an oil price of $58 per barrel and crude exports of roughly 4 million barrels per day, a figure that includes production from the Kurdistan region. Total planned spending in the draft reaches 217 trillion dinars, equivalent to about $166 billion, and lawmakers say those assumptions still produce a fiscal gap exceeding 40 trillion dinars. At the assumed price and export level, Iraq would collect roughly $85 billion in gross crude export revenue annually before deductions for discounts, transport and other adjustments — a sum well below what independent assessments say is needed to balance the budget. The International Monetary Fund's 2025 fiscal breakeven estimate for Iraq is about $92.43 per barrel, underscoring how far the budget's price assumption sits below the level the IMF associates with fiscal balance. To address the shortfall, Baghdad could pursue borrowing, spending cuts, withdrawals from reserves or revenue increases, lawmakers say. Officials are also considering a devaluation of the Iraqi dinar to a range between 1,400 and 1,500 per U.S. dollar from roughly 1,300 today; because oil is sold in dollars while many expenditures are in dinars, a weaker currency would raise the dinar value of export receipts but would also increase the cost of imports. The draft budget underscores Iraq's dependence on oil income and the operational risks that amplify that dependence. This year disruptions tied to the Iran conflict affected shipments through the Strait of Hormuz — historically a major export route — prompting Baghdad to divert more exports north through Turkey and to pursue alternative pipelines through Syria and Jordan. Separately, Iraq has set an ambitious production target of 8–10 million bpd within six years, a scale-up that would require substantial investment in production capacity and export infrastructure if it is to close current and future fiscal gaps.