AGP Executive Report

CBI & CMC Digital Push: Iraq’s central bank and the Communications and Media Commission met to advance a digital payments framework, covering rules for fintech licensing, influencer-linked transactions, TikTok financial services, and anti-financial-crime controls. Public Pay Crunch: Delayed salary payments to state workers have stretched into a fifth week, squeezing household spending and slowing market activity as Iraq faces liquidity strain amid weaker oil receipts. US Cash to Baghdad: The US Federal Reserve sent a $500m cash shipment to the Central Bank of Iraq to support traveler transactions and foreign remittances, signaling continued banking normalization. Air Connectivity Boost: Fly Baghdad was removed from the US sanctions list, allowing banks, payment providers, insurers, and suppliers to resume dealings and helping the airline rebuild routes. KRG vs Gas Supply: Kurdistan’s government criticized Khor Mor gas operators DanaGas and Crescent for supplying Baghdad’s electricity ministry without Erbil’s approval, raising contract and governance questions. Oil Smuggling Crackdown: Iraqi forces arrested 11 suspects in Nineveh over an alleged oil smuggling network, freezing assets tied to illicit payments and laundering through businesses. Kurdistan Energy M&A: Genel Energy rejected Norway’s DNO takeover bid, though DNO says it may keep pursuing the offer. Regional Security Shockwaves: Baghdad and Iran-aligned factions reportedly agreed to de-escalate a standoff, including postponing operations against armed groups in exchange for no attacks on Saudi Arabia—amid broader Gulf defense moves and warnings of coordinated strikes.

Iraq Cash Crunch: Iraq may struggle to pay this month’s public-sector salaries as oil revenue is squeezed by Strait of Hormuz disruptions, with officials reportedly weighing borrowing over 3 trillion dinars from local private banks to keep payroll moving. Basra Oil Exports: Three tankers docked at Basra to load Iraqi crude, underscoring how quickly export logistics can swing revenue when shipping routes tighten. CBI Liquidity Support: The US Federal Reserve reportedly sent a $500m cash shipment to Iraq’s central bank for traveler transactions and external remittances. Anti-Corruption Drive: Iraq’s Integrity Commission escalated probes in Al-Diwaniyah, suspending three senior health officials over alleged irregularities in a government vehicle auction. KRG Energy Dispute: The Kurdistan Regional Government accused Dana Gas and Crescent Petroleum of starting gas supplies to Iraq’s electricity ministry from Khor Mor without Erbil’s consent. Regional Security Pressure: Saudi Arabia warned of imminent coordinated attacks by Iraqi militias and Yemen’s Houthis under IRGC supervision, raising the risk premium for Gulf trade and energy. Turkey-Iraq Oil Route: Ankara and Baghdad signed a one-year crude oil transport deal allocating 750,000 bpd via the Silopi–Ceyhan pipeline to protect exports amid Hormuz uncertainty.

Iraq’s Cash Crunch: Iraq’s parliament is moving toward an emergency session next week as the Strait of Hormuz disruption squeezes oil revenues and threatens delays in paying public salaries, with lawmakers citing the need to assess the country’s worsening finances. Oil Route Workarounds: Iraq and Syria are pushing to revive an old Kirkuk-to-Baniyas pipeline that could be back in service within three years, aiming to reduce future vulnerability to Hormuz disruptions. Regional Energy Pressure: Iran and Oman are nearing a new Hormuz traffic arrangement, but Tehran says it’s not a full reopening and security isn’t guaranteed—an issue that matters directly for Iraq’s export income and shipping costs. Sanctions Relief for Aviation: The U.S. removed Fly Baghdad from the OFAC SDN list after a two-year compliance overhaul, though the airline’s owner remains sanctioned—an important signal for Iraq’s air connectivity and business risk. Shipping Costs Watch: Maritime groups oppose any mandatory tolls for Hormuz, warning it could weaken international law and raise global trade costs. Kurdish Peace Law: Turkey filed a bill to advance a PKK peace initiative, including judicial handling and a pardon framework for former fighters—relevant for regional stability and cross-border commerce.

Kurdistan-Federal Talks: Iraqi PM Ali al-Zaidi met KRI President Nechirvan Barzani in Baghdad, reaffirming the government’s commitment to resolve all outstanding disputes with Erbil under the constitution while protecting Iraq’s unity and sovereignty, and stressing tighter federal-regional coordination on politics, the economy and security. Regional Pressure & Retaliation Risk: Iraqi factions under the Islamic Resistance umbrella have not yet decided whether to retaliate after July 29 Saudi airstrikes on PMF sites, with a deadline around Aug. 7 and high-level pressure to avoid escalation ahead of al-Zaidi’s expected Saudi visit. Neighboring Diplomacy: Saudi Arabia backed stronger Iraqi ties with Arab and Islamic countries while urging that Iraqi territory and resources not be used to attack neighbors, as Saudi and Iraqi officials discussed regional stability and upcoming security cooperation. Fiscal Strain: The State Administration Coalition meeting in Baghdad is set to focus on worsening finances, delayed salaries and pensions tied to Strait of Hormuz disruptions, and the security fallout from the strikes. Aviation Sanctions Relief: The US Treasury lifted sanctions on Fly Baghdad after the airline changed behavior, removing barriers to using the US banking system while stressing no policy shift toward Iran or the IRGC. Energy Investment Push: A report says Iraq topped Arab oil and gas deals in July, signing nine oil-field development agreements with US firms during al-Zaidi’s Washington visit, alongside broader infrastructure and technology understandings.

Public Finance Strain: Iraq’s July salary payments are reportedly delayed as oil exports slump under Strait of Hormuz disruption, with the Finance Ministry warning it may not pay on time if the outage continues. Religious Tourism Economics: Arbaeen in Karbala is drawing record crowds (22M+ pilgrims, millions foreign), but shrine-city businesses face “thin returns” as regional war and Iran’s economic squeeze hit spending. Energy Supply Push: Dana Gas and Crescent Petroleum began natural gas deliveries from the Khor Mor field to Iraq’s Ministry of Electricity for the Kirkuk Taza power station, aiming to stabilize power generation. Trade & Logistics Diversification: Türkiye is discussing expanded energy routes via Iraq toward Ceyhan to reduce reliance on Hormuz, building on a deal to move up to 750,000 bpd through the Iraq-Türkiye pipeline. Currency Watch: Reports say Iraq’s currency in circulation has surged past $86B, while local exchange rates are moving in Baghdad and Erbil. Food Trade Impact: Thailand’s rice exports fell 18.81% in H1 2026, with Middle East conflict disrupting shipments to Iraq since March.

Currency Watch: Iraq’s currency in circulation jumped to 113.560 trillion dinars (about $86.3B) in May 2026, up 13.8% from end-2025, as liquidity pressure grows amid revenue-spending gaps and delayed salaries. Energy Supply: Dana Gas and Crescent Petroleum began natural gas deliveries to Iraq’s Kirkuk Taza power station from the Khor Mor field under a one-year deal (100 MMscf/d), aiming to stabilize electricity generation after security disruptions in Kurdistan. Regional Trade Routes: Iraq and Syria move to restore the Haditha–Baniyas oil pipeline, with restoration expected in about 30 months to three years, as Baghdad looks for alternatives amid Strait of Hormuz risk. Oil & Shipping Risk: With Iran–Oman talks progressing on reopening Hormuz under a service-fee model, officials say the arrangement could reshape shipping costs and flows—key for Iraq’s export logistics. Religious Tourism Boom: Arbaeen crowds keep breaking records: Karbala reported 22M+ entrants (5M foreign), while Najaf logged 17M+ arrivals, boosting short-term demand for transport, services, and local business.

US-Iran Talks vs. Hormuz Risk: Trump says Washington and Tehran are resuming talks and calls it Iran’s “last chance,” but Iran denies US negotiations and says talks are only with Oman on a temporary Hormuz route; meanwhile a vessel was hit near Al Khasab, Oman, and Hormuz traffic stayed at a trickle as shipowners weigh safety. Iraq’s Balancing Act: Arbaeen pilgrimage in Karbala drew 4.88 million entrants since Muharram began, with Iranian FM Abbas Araghchi attending—highlighting Iraq’s tight ties to both Washington and Tehran amid fears of renewed escalation. Iraq FX Watch: The dollar rate rose in local markets, with the parallel market up about 1,000 IQD per $100 versus the prior session, while the Central Bank’s official rate stayed at 131,000 IQD per $100. Oil Market Spillover: Exxon’s CEO warned gas prices won’t track crude quickly because pump prices follow refined product supply and demand; Aramco also reported a 44% profit jump despite Hormuz disruptions. Regional Trade/Industry: Iraq’s SOMO sold about 42m barrels in July, while Iraq-Turkey energy cooperation continues, including a one-year pipeline deal covering 750,000 bpd.

Hormuz Talks vs. Threats: Trump says US-Iran talks are set to begin Monday and that the first step is reopening the Strait of Hormuz, but Iran denies direct talks with Washington and says discussions are with Oman only for a temporary safe route—leaving oil markets jittery and uncertainty high. Oil Price Spillover: Brent slid about 5% to a three-week low as the pause in strikes raised hopes for steadier Gulf supply, even as the details of any shipping corridor remain unclear. Iraq’s Shipping Priority: Iraq’s oil ministry says Baghdad is in talks with Iran to secure smooth passage for Iraqi tankers through Hormuz, after earlier assurances failed to fully materialize. Trade Workarounds: With chokepoints under pressure, analysts highlight overland alternatives like the Iraq-Türkiye Development Road corridor, while Iraq and Türkiye push pipeline and export plans to reduce reliance on maritime routes. Regional Business Links: Bulgaria’s BTA signed a partnership agreement with Iraq’s INA to expand regular news exchange and journalist cooperation, supporting cross-border media and business visibility. Arbaeen Economy & Diplomacy: Iran’s foreign minister and officials say Arbaeen preparations reflect strong Iran-Iraq cooperation, including on economic and trade ties, as hundreds of thousands of pilgrims move through Iraq. Security Memory: Yazidi leaders marked the 12th anniversary of the Sinjar genocide, renewing pressure on the Kurdistan Region to keep searching for missing people.

Oil & Trade Routes: Iraq is pushing for stability in the Strait of Hormuz as Foreign Minister Fuad Hussein spoke with Iran’s Abbas Aragchi by phone, stressing dialogue and warning against steps that could escalate tensions and disrupt maritime navigation. Energy Exports: Turkey and Iraq signed a one-year pipeline arrangement for at least 750,000 barrels per day through Ceyhan, after the prior deal expired, with talks continuing on a broader energy framework. Oil Market Watch: OPEC+ approved a September 188,000 bpd output increase, a move that could affect regional fuel costs even as Hormuz disruptions and Middle East strikes keep prices volatile. Port Business: ICTSI reported a strong first-half jump in recurring net income and container volumes, citing higher global throughput and new terminals in Africa and Asia, while noting FX swings and weaker Iraq throughput. Regional Economics: Kurdistan Region President Nechirvan Barzani met Syria’s interim leader Ahmed al-Sharaa in Damascus to discuss boosting economic ties and coordination amid Syria’s political transition. Security & Business Risk: Reporting highlights how Iraq’s armed landscape keeps expanding beyond state control, raising uncertainty for investors and complicating efforts to manage cross-border risks.

Iran-US De-escalation (Hormuz): President Trump says he will halt new strikes on Iran, claiming “parameters” for a deal include the “immediate, complete, and total opening” of the Strait of Hormuz and an end to Iran’s nuclear threat, but Iran’s officials deny any deal and say the strait won’t return to its pre-Feb. 28 status. Regional Security Warnings: U.S. embassies in Iraq and across the region urged Americans to consider departing or be ready to leave as tensions rise and shipping risks grow. Iraq Fiscal Strain: Delays in public-sector salary payments are reigniting debate over the Central Bank’s limits as oil revenue falls; economists warn that using reserves or borrowing dinars could raise inflation pressure if disruptions persist. Weapons Control & U.S. Funds: Washington conditioned release of $30B in frozen Saddam-era guarantees on Iraq making progress toward bringing weapons under state control, a key pillar of PM Ali al-Zaidi’s reform agenda. Anti-Corruption Push: National Wisdom Movement leader Ammar al-Hakim backed al-Zaidi’s crackdown and reform drive through legal and institutional channels. Arbaeen Economy & Logistics: Iran’s Supreme Leader praised Iraqi Arbaeen hospitality; Iraq reported millions of entrants and allocated billions of dinars for services and transport, underscoring the pilgrimage’s economic weight. Oil Market Backdrop: OPEC+ agreed to raise September output by 188,000 bpd, with Iraq among the participating producers, as energy supply fears linger. Energy Development: Iraq approved competitive bidding for the Integrated Qayyarah heavy-oil project, aiming to bundle upstream production with gas and downstream processing to boost revenues. Corruption Recovery: Iraq’s Rusafa Investigative Court recovered about IQD 20 billion tied to fraud and money-laundering cases, with legal proceedings still ongoing.

Iraq-Türkiye Oil Corridor: Iraq and Türkiye extended their key crude pipeline deal for one year, keeping at least 750,000 barrels per day flowing to Ceyhan as Hormuz risks disrupt Gulf shipping; Baghdad also signaled plans to expand cooperation beyond oil into electricity and water. New Export Route Buildout: Iraq’s oil ministry said a longer Basra–Haditha–Kirkuk–Ceyhan pipeline is expected to be completed in three years or less, aiming to diversify exports. Iran War Turns Volatile: Trump said he will pause threatened US strikes on Iran if a deal is reached “rapidly,” with the proposal tied to the immediate reopening of the Strait of Hormuz; Iran and regional officials pushed back, while US embassies across the Middle East—including in Iraq—issued “consider departing” security alerts. Arbaeen Logistics: Iraq ramped up transport and rail plans for Arbaeen in Karbala, adding buses and coordinating pilgrim movement amid heightened security. Local Governance Debate: Kirkuk’s move to join the Turkic municipalities union sparked calls for more transparency on agreements and implementation.

Iraq–Türkiye Oil Exports: Iraq and Türkiye signed a one-year deal to move at least 750,000 barrels per day of Iraqi crude through the Kirkuk–Ceyhan pipeline, as Baghdad tries to diversify export routes amid Strait of Hormuz disruptions. Central Bank Watch: Iraq’s foreign reserves slid by about $7.4bn in H1 2026 to $93.7bn by end-May, while gold holdings rose 5.7% to $25.6bn. Regional Security & Business Risk: U.S. embassies, including in Iraq, issued fresh warnings to Americans about “unforeseen escalation,” possible airspace closures, and travel disruptions tied to renewed Iran strike threats. Banking: Jordan’s Arab Bank reported H1 2026 profit up 7% to $571m, citing stronger fee income and continued expansion, including its Iraq franchise. Local Governance: Kirkuk’s admission to the Union of Turkish World Municipalities sparked calls for clarity on commitments after the governor’s Ankara talks. Social Impact: Al-Sulaymaniyah’s children’s shelter is hosting 65 minors separated from families, providing education and support while handling legal cases. Cross-border Transport: Egypt began enforcing a reciprocity rule banning empty Iraqi trucks from entering, with plans for a visa mechanism and changes to cargo transfer at border crossings.

Iraq-Turkiye Oil Exports: Iraq’s Oil Minister Basim Mohammed Khudair al-Abbadi traveled to Turkiye to finalize talks and sign an agreement to transport and load Iraqi crude via the Iraq-Turkiye pipeline to Ceyhan, aiming to expand export outlets and protect state revenues as Hormuz disruptions strain global supply chains. Fiscal Strain & Salaries: Iraq’s government admitted difficulty paying salaries on time, with officials warning the state faces worsening fiscal pressure as oil revenue remains the backbone of public spending. Arbaeen Pilgrimage Economy: Iranian pilgrims keep flowing into Iraq for Arbaeen, with reports of millions of foreign arrivals and heavy travel despite regional tensions—supporting local services and commerce around Karbala. Baghdad Housing Pressure: Newlyweds in Baghdad are increasingly moving in with in-laws as rents climb, pushing some families into cramped living arrangements and even makeshift roof rooms. Shipping & Energy Risk: Oil prices edged up after Iran said it stopped tankers trying to exit the Strait of Hormuz, while separate reporting highlights investigations into a drone attack near Egypt’s Damietta port—both raising risks for regional trade routes. Regional War Spillover: Multiple reports say the US-Iran conflict is widening across the Middle East, with Iraq repeatedly cited as a launch and retaliation front, adding uncertainty for business planning and logistics.

Chevron Expansion Watch: Chevron’s CFO says the company sees “significant potential” to grow in Iraq, pointing to progress on West Qurna 2 and Nassiriya talks and new export-route work with Baghdad. Fiscal Pressure: Iraq’s oil-driven budget strain is tightening fast, with the health minister saying the state needs about 10.8tn dinars monthly for public wages versus roughly 2.5tn from oil revenues. Arbaeen Economy Boost: Iraq expects around 22 million pilgrims for Arbaeen, including up to 5 million from abroad, with officials ramping transport and volunteer services to lift tourism, retail, and hospitality. Militia Disarmament Standoff: Reports say PM Ali al-Zaidi threatened to resign unless Iran-aligned armed groups submit to state control, as regional strikes and sovereignty disputes keep escalating. Regional Security Tensions: Syria warned Iraq that strikes from Iraqi soil could trigger Syrian action against the “militias” inside Iraq, adding pressure on Baghdad’s new security strategy. Energy Shipping Shock: Hormuz disruption claims and counterclaims continue as oil markets react to possible wider conflict, with tanker routing and transit uncertainty still hitting trade flows. Tech & Fraud: A new industry report says AI-enabled fraud surged sharply, with small and medium businesses hit hardest—raising the stakes for Iraq’s banking and payments security.

Iraq’s Security & Sovereignty: Moqtada al-Sadr renewed pressure on Iraq’s government to rein in weapons outside state control, linking militia-linked risks to deaths in the Popular Mobilization Forces and warning against using Iraqi territory as a launchpad for regional attacks. Fuel & Trade Shock: As the US-Iran conflict widens, analysts warn that renewed strikes and talk of a land blockade of Iran could further disrupt oil flows and raise costs for regional economies, with Iraq directly exposed to spillover from Hormuz and shipping risks. Banking & Payments: Rafidain Bank moved to speed Iraq salary payments, while separate coverage notes Iraqi banks are accelerating US compliance steps—both aimed at stabilizing cash flow amid volatility. Oil & Infrastructure Moves: Iraq’s oil exports and revenue pressures remain in focus, alongside ongoing efforts to expand routes and investment ties (including Iraq-Turkey trade and pipeline discussions) to protect earnings. Regional Human Impact: UNHCR data shows Syrian refugees in Iraqi Kurdistan are reluctant to return after Assad’s fall, citing security and reconstruction gaps—an added strain on local services and household budgets.

Iraq’s Budget Crunch: Iraq’s Finance Ministry says it needs about $2.5B+ to complete monthly salary, pension, and welfare payments, with payroll obligations put at 7.8T IQD and a liquidity gap still holding back pensions. Banking Pressure: Private banks are facing liquidity shortages that could force mergers, while lenders are tightening anti-money laundering controls and dollar-transaction monitoring to meet Central Bank of Iraq requirements. Regional War Hits Iraq’s Sovereignty Debate: Former PM Haider al-Abadi warns that using force to limit weapons to the state could spark fighting among Iraqis, and he says there’s still no conclusive proof attacks on Saudi targets were launched from Iraqi territory. US-Saudi Strikes and Baghdad’s Response: Iraq says it had “no prior knowledge” of US-Saudi attacks on Iran-aligned PMF sites, while the strikes followed claims of drone attacks on Saudi oil facilities. Oil and Shipping Fallout: Oil prices stay volatile as the US-Iran conflict strains supply routes, with Hormuz and Red Sea risks keeping loadings subdued and raising costs for regional trade.