Iraq Economic News and Points To Ponder Monday Evening 6-1-26
Exchange Offices Expand In Iraq: Cash Economy Outpaces Banking Sector
2026-06-01 Shafaq News- Baghdad Exchange and money transfer offices have expanded significantly across Iraq in recent years, reflecting continued reliance by citizens and traders on non-bank financial services despite gradual improvements in financial inclusion.
According to Prime Minister’s financial adviser Mudher Mohammed Saleh, about 87% of Iraq’s money supply, roughly 95 trillion Iraqi dinars (about $72.5 billion) out of a total 109 trillion dinars (around $83.2 billion), remains outside the banking system. “The trend limits banks’ ability to channel funds into lending and investment and highlights the persistence of cash hoarding and weak integration into the formal financial sector.”
Although financial inclusion indicators have improved, a large segment of Iraq’s population remains outside the banking system or uses it only occasionally. The Central Bank of Iraq said financial inclusion surpassed 40% in 2025, up from around 20% in previous years. The figure includes bank accounts, electronic wallets, and digital payment tools rather than traditional bank accounts alone.
Economic estimates nevertheless suggest that many adults either do not have active bank accounts or rarely use them, underscoring the continued dominance of cash transactions in the local economy.
Iraq’s heavy dependence on imports has also contributed to demand for exchange offices. Traders often turn to these businesses for foreign currency and international transfers because of customs-related complications and difficulties some importers face in accessing US dollars through the Central Bank’s official channels.
This dynamic has increased demand for dollars in the local market, particularly among small and medium-sized traders who struggle to access formal transfer mechanisms. Regulatory estimates indicate that Iraq has thousands of exchange offices and currency companies nationwide, compared with roughly 900 branches operated by public and private banks.
The exchange sector plays an important role in maintaining liquidity flows, but the gap between the official dollar exchange rate and the parallel market rate, ranging from 15% to 20% during periods of market stress, has encouraged transactions outside the banking system and fueled currency speculation. The sector is also estimated to support more than 50,000 direct and indirect jobs in money transfers and liquidity management.
Read more: Cash culture dominates Iraq, reform efforts stall
In an interview with Shafaq News, economic expert Dirgham Mohammed Ali said some exchange companies have begun performing functions similar to those of banks by providing loans and salary-backed financing, practices he described as falling outside their legally authorized activities.
Ali noted that the trend reflects the limited role of some banks in extending credit to economic sectors and warned that such lending carries significant risks because of high interest rates and the absence of regulatory oversight governing loan issuance and repayment mechanisms.
“Lending activities are not part of the nature of exchange companies’ work or the licenses granted to them,” he said, adding that their legal role is limited to currency exchange and foreign transfers.
Financial expert Hilal al-Taan told Shafaq News that many Iraqis prefer exchange offices because they offer faster services, simpler procedures, and longer operating hours than government banks.
He added that weak confidence in the banking sector and the economy’s heavy reliance on cash have reinforced this preference. Exchange offices, he argued, facilitate domestic and international transfers and help provide dollars for trade and imports.
On the foreign exchange market, al-Taan stressed that exchange offices influence the dollar rate indirectly through supply and demand dynamics. Increased demand for foreign currency, speculation, and the gap between official and market rates contribute to exchange-rate fluctuations, while expectations of future price increases can also encourage citizens to buy dollars.
Read more: From Cash to Cards: Iraq's shift to a cashless future
China’s Iraqi Oil Imports Crater To 60K Bpd In May 2026
2026-06-01 Shafaq News- Beijing/ Baghdad China’s imports of Iraqi crude oil fell sharply in May to 60,000 barrels per day (bpd), down from 790,000 bpd in February, Reuters reported on Monday.
Overall, China’s seaborne crude imports fell to 6.36 million bpd this month, the lowest level in nearly a decade, compared with 8.10 million bpd in April. The decline came as Chinese buyers scaled back purchases amid rising prices following escalating tensions in the Middle East, as well as supply disruptions linked to delayed shipments from several producers, including Iraq and Kuwait.
The Strait of Hormuz, a strategic waterway through which about 20% of global oil and liquefied natural gas supplies transit, has remained largely restricted since Feb. 28 after the US–Israel war on Iran, disrupting energy flows and limiting shipments across the region.
Iraq, OPEC’s second-largest oil producer, recorded no crude oil shipments to the United States last week, while its crude exports to India fell by around 84%.
https://www.shafaq.com/en/Economy/China-s-Iraqi-oil-imports-crater-to-60K-bpd-in-May-2026
Back-To-Back Ships Reach Iraq’s Umm Qasr Port
2026-06-01 Shafaq News- Basra A giant Mediterranean Shipping Company (MSC) container ship arrived at Umm Qasr port in Basra, southern Iraq, becoming the second cargo vessel to reach the facility within hours, the General Company for Iraqi Ports reported on Monday.
Farhan Al-Fartousi, Director General of the company, told Shafaq News that the vessel, which came from the Emirati city of Dubai, is set to load 96 export-bound containers, including dates, soft drinks, and spare parts destined for foreign markets.
Earlier today, Umm Qasr North Port received its first direct cargo vessel from China, carrying 29,720 tons of goods and marking the resumption of direct maritime shipments through the Strait of Hormuz.
https://www.shafaq.com/en/Economy/Back-to-back-ships-reach-Iraq-s-Umm-Qasr-port
Iraq Denies Gasoline Shortage As Supply Exceeds Demand
2026-06-01 Shafaq News- Baghdad Iraq's Oil Ministry on Monday dismissed reports of a gasoline shortage, attributing congestion at fuel stations in Baghdad and several other provinces to rising fuel consumption amid soaring temperatures.
Ministry spokesperson Abdul-Sahib Bazzoun Al-Hassnawi told Shafaq News that supplies of both regular and premium gasoline remain stable, with daily consumption standing at around 32 million liters, while domestic output exceeds that level.
Al-Hassnawi linked the increased demand to travel during and after the Eid al-Adha holiday, as well as preparations for the upcoming Eid al-Ghadir observance. He also pointed to higher temperatures, which have increased fuel use as more motorists rely on vehicle air conditioning.
“The ministry has maintained fuel supplies since the outbreak of the regional conflict to ensure the availability of petroleum products,” the official added.
Read more: Mechanics link poor gasoline quality to increase in vehicle repairs across Iraq
https://www.shafaq.com/en/Economy/Iraq-denies-gasoline-shortage-as-stocks-exceed-demand
Dollar Edges Higher In Baghdad And Erbil
2026-06-01 Shafaq News- Baghdad/ Erbil The US dollar closed Monday’s trading higher in Iraq, hovering around 154,000 dinars per 100 dollars.
According to Shafaq News market survey, the dollar traded in Baghdad's Al-Kifah and Al-Harithiya exchanges at 153,600 dinars per 100 dollars, up from the morning session’s 153,500 dinars.
In the Iraqi capital, exchange shops sold the dollar at 154,000 dinars and bought it at 153,000 dinars, while in Erbil, selling prices stood at 153,650 dinars and buying prices at 153,600 dinars.
https://www.shafaq.com/en/Economy/Dollar-edges-higher-in-Baghdad-and-Erbil-3-6
Mechanical Malfunction Hits MSC Container Ship Near Iraq’s Umm Qasr
2026-06-01 Shafaq News- Basra A large Mediterranean Shipping Company (MSC) container vessel suffered a mechanical failure in the Khor Abdullah waterway on Monday shortly after departing Umm Qasr North Port in Basra, southern Iraq, with 96 export containers onboard, a security source told Shafaq News.
Pressure buildup inside balance tank compartments 9 and 10 caused a technical explosion aboard the vessel after it left the port, with no indications of sabotage or any other external factor.
Authorities have opened an investigation to determine the circumstances of the incident and evaluate any resulting damage.
The vessel had arrived earlier today from Dubai and was due to transport Iraqi products, including dates, soft drinks, and spare parts, to international markets. The General Company for Iraqi Ports noted that it was the second major cargo ship to reach Umm Qasr within hours.