S&P Global affirms Iraq’s sovereign credit ratings at B-/B

Baghdad (IraqiNews.com) – S&P Global affirmed Iraq’s sovereign credit ratings at ‘B-/B’ on Friday, indicating a challenging outlook for the next six to 12 months due to the ongoing Middle East war and the closure of the Strait of Hormuz.

The Iraqi economy heavily depends on the oil sector, which makes it susceptible to reductions in petroleum export volumes through this crucial trade route.

The ratings, which assist in gauging investment risks, vary from ‘AAA’ to ‘D,’ with ‘AAA’ signaling the highest and safest grade and ‘D’ indicating a significant default risk.

S&P predicts 2.9 million barrels per day of oil output in 2026, a 28% decrease compared to the pre-war average of 4.0 million bpd in 2025, highlighting present levels of production and a weak recovery in the second half of the year, Reuters reported.

The US firm specializing in financial data, energy, and commodity intelligence forecasts Iraq’s fiscal and balance-of-payments would remain under pressure until the end of the year, with oil-related flows accounting for over 90 percent of budget income and goods exports.

S&P Global also said that the country’s GDP is expected to decline by 15 percent in 2026.

Stronger oil prices throughout the year could enhance financial revenues, provided there is a modest recovery in oil exports during the latter half of 2026.