Fitch Ratings confirmed that Iraq's long-term foreign currency issuer's default rating is B-, and the outlook is stable. The rating reflects the shortcomings of Iraq's high dependence on commodities, weak governance, high political risk, and strong fiscal rigidity; favorable supporting factors include sizable but declining foreign exchange reserves, abundant government deposits, a good government debt structure, and low interest expenses. The benchmark scenario assumes that some kind of continuing agreement will be reached around the first quarter of 2027, and navigation will resume in the Strait of Hormuz. Prior to that, intermittent attacks and countermeasures are expected, mainly targeting military targets and ships. Such incidents are likely to continue to disrupt Iraqi oil shipments, but they are not expected to cause significant physical damage. The possibility that the conflict will escalate again in the second half of 2027 and beyond is not ruled out. This conflict highlights Iraq's fragility: oil exports depend on the Gulf waterway and are extremely vulnerable to regional security shocks; at the same time, Iraqi armed factions are once again involved in regional warfare, and there is also a risk that oil exports and internal security will be disrupted.

Fitch Ratings confirmed that Iraq's long-term foreign currency issuer's default rating is B-, and the outlook is stable. The rating reflects the shortcomings of Iraq's high dependence on commodities, weak governance, high political risk, and strong fiscal rigidity; favorable supporting factors include sizable but declining foreign exchange reserves, abundant government deposits, a good government debt structure, and low interest expenses. The benchmark scenario assumes that some kind of continuing agreement will be reached around the first quarter of 2027, and navigation will resume in the Strait of Hormuz. Prior to that, intermittent attacks and countermeasures are expected, mainly targeting military targets and ships. Such incidents are likely to continue to disrupt Iraqi oil shipments, but they are not expected to cause significant physical damage. The possibility that the conflict will escalate again in the second half of 2027 and beyond is not ruled out. This conflict highlights Iraq's fragility: oil exports depend on the Gulf waterway and are extremely vulnerable to regional security shocks; at the same time, Iraqi armed factions are once again involved in regional warfare, and there is also a risk that oil exports and internal security will be disrupted.