Baghdad-Erbil ties at ‘highest Levels,’ Iraqi PM advisor tells Rudaw

ERBIL, Kurdistan Region – Federal Iraq’s relationship with the Kurdistan Region is at its “highest levels,” Prime Minister Mohammed Ali al-Zaidi’s financial advisor told Rudaw on Thursday, adding that unprecedented coordination between Baghdad and Erbil will shape the 2027 budget despite economic shocks and severe disruptions to the country’s oil exports. 

“The relationship between the central government and the Region is currently at its highest levels of coordination and connection,” Mazhar Mohammed Saleh said, adding that “Iraq is in its best shape right now.”

“The satisfaction of the people of Kurdistan is absolutely the satisfaction of the people of Iraq… Because of this, the 2027 budget is one in which the Region will have a major role,” Saleh said, noting that coordination on oil, the budget, revenue, expenditures, customs, and tax policy will remain high. 

The remarks come after Iraqi oil exports plummeted following the outbreak of the Iran war in late February, which disrupted shipping through the Strait of Hormuz – the route for 90 percent of Iraq’s oil exports.

Iraqi crude production fell from about 4.14 million barrels per day (bpd) before the crisis to 1.49 million bpd at the height of the blockade, according to official figures. Before the disruption, Iraq exported about 106 million barrels of crude per month, with a large share passing through the Strait of Hormuz.

“So far, the [Iraqi] state has not resorted to external borrowing. Up until this moment, we are self-sufficient with internal borrowing… This process works because the Central Bank’s reserves are strong and support stability,” Saleh said.

He added that the bank is “legally independent and we will not interfere in its work. We simply expect the announcements from the monetary policy as recipients, but the coordination is definitely there.”

Iraqi Oil Minister Basim Mohammed Khudair told state media Saturday that the crisis in the Strait of Hormuz has deeply impacted the country’s crude exports.

“We must find solutions to prevent a recurrence,” Khudair said, adding that Iraq’s oil fields “are ready to restore export levels to their pre-war rates.”

Iraq is currently exporting between 1.5 million and 1.7 million bpd from production of around 2.7 million bpd, according to the minister.

Amid the crisis, Iraqi oil exports dropped to 18.6 million barrels in March, generating about $1.96 billion in revenue, compared with more than 99 million barrels and $6.81 billion in February, according to figures from Baghdad’s oil ministry.