EL7.AI
Macro EconomyMediumUpdated×5•Originally published 25 March 2026•Updated 26 March 2026•
1 min read

Hormuz Crisis Threatens Iraq's Economy as Oil Revenues Collapse

Key Facts

1Transit fees of $2 million through Hormuz may have more than doubled logistics costs.
2The SPIB bond ETF faces heightened risks from widening credit spreads and rising yields due to the oil crisis.
3Ongoing geopolitical disruptions are putting a floor on oil prices due to persistent inflationary pressures.

Tehran's draft legislation for transit fees in the Strait of Hormuz continues to cause severe disruptions, placing Iraq's economy at risk of collapse as revenues dwindle. As OPEC’s second-largest producer, Iraq's dependence on petroleum for 90% of its state budget makes the maritime blockade an existential threat to its fiscal stability. In stark contrast, Iran is currently earning $139 million a day from oil exports, as its crude remains the only one unimpeded through the Strait compared to regional rivals. Tehran is further capitalizing on the crisis by benefiting from higher global oil prices and significantly reduced discounts on its barrels. These developments occur alongside inflated logistics costs and threats to 85% of regional polyethylene exports. Consequently, investors are conducting a wholesale re-evaluation of exposure to Middle Eastern commodity-linked assets and corporate debt, while the SPIB ETF remains under pressure from widening credit spreads.