Iraq cuts target oil price in federal budget amid market slump

On Tuesday, financial adviser to Iraq's prime minister Mudher Saleh said the target price of oil in the federal budget for 2025 to be lowered from the last year's $80 per barrel. At the start of this year, the decision was delayed due to necessity to negotiate payment terms with oil companies.

The oil market has been declining this year amid turmoil caused by the US President's plan to impose large-scale tariffs on imports from most countries. In April, Brent crude prices fell by 13% on fears of a recession and a likely decline in energy consumption, especially in the United Stated and Asia.

In mid-2023, Iraq's parliament approved spending plans through 2025. The 2023 budget implied a price for oil of $70, with the possibility of reviewing and adjusting the target in subsequent years. Brent crude oil price is now hovering below $65 a barrel in London.

As noted by Bloomberg, lower prices put significant pressure on the economies of oil-dependent countries in the Middle East. For Iraq, it is especially important to keep higher prices to support economic recovery.