ERBIL (Kurdistan 24) – As oil prices in Iraq become more stable, the cost of crude has gradually risen to nearly $70 per barrel for the first time in six years. Officials in Iraq’s Parliament say the extra money would be used to fund reconstruction in war-torn areas.
Iraq almost entirely relies on oil to generate its revenue; therefore, the rise in oil prices will give the country an economic boost as the annual budget for 2019 was based on the previous $56 per barrel amount.
Ahmad Safar, a member of the Economic Council in the Iraqi Parliament, said Baghdad would benefit from the extra revenue the new oil prices generate.
“The government will save and use the extra budget [from oil revenues] for emergency purposes, according to the law,” Safar told Kurdistan 24.
“The extra money will be used toward the reconstruction of areas liberated from the so-called Islamic State,” he added.
Oil prices started to surge after the Trump administration announced that all oil buyers would have to end imports from Iran by April 2019 or face US sanctions.
Iraq’s 2019 budget is estimated at 105 trillion IQD, with a 24 trillion IQD budget deficit. Some officials in Iraq say the discrepancy will likely be filled with the extra oil revenue.
Sadiq Slety, a member of the Oil and Energy Committee in the Iraqi Parliament, said the government plans to tackle the 24 trillion IQD annual budget shortage “with extra revenue from oil.”
“The extra oil revenue will be used to fill the gap in the 2019 budget deficit or any other emergency the government decides upon,” Slety told Kurdistan 24.
“Despite the rise in oil prices, Iraq has to abide by the Organization of the Petroleum Exporting Countries (OPEC) rate of production which is 3,880,000 bpd,” he noted.
Iraq has one of the world’s largest oil reserves and is OPEC’s second-largest oil producer.
Editing by Karzan Sulaivany
(Additional reporting by Shivan Jabari)