Pessimism Grows over Iraq’s Prospects for Resuming Oil Exports

An Iraqi petroleum products tanker (Iraqi News Agency) 
An Iraqi petroleum products tanker (Iraqi News Agency) 
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Pessimism Grows over Iraq’s Prospects for Resuming Oil Exports

An Iraqi petroleum products tanker (Iraqi News Agency) 
An Iraqi petroleum products tanker (Iraqi News Agency) 

A growing number of Iraqi oil and economic experts are voicing pessimism about the country’s ability to resume crude exports via the Gulf and the Strait of Hormuz, despite Iran’s announcement of an “exception” allowing Iraqi shipments to pass as those of a “friendly country”.

Iraq has suffered a sharp blow to its oil sector following the US-Israeli conflict with Iran and the closure of the Strait of Hormuz, losing roughly three-quarters of its exports. The country had been producing about 3.5 million barrels per day, but current export volumes have dropped to around one million barrels per day, most of which is diverted to domestic consumption.

More than 300,000 barrels per day are still exported via the Kurdistan Region through Türkiye’s Ceyhan port, while smaller quantities are transported overland by tanker trucks to Jordan and Syria.

As a result of the collapse in exports, Iraq is expected to face a monthly fiscal deficit of between $5 billion and $6 billion, placing the government under severe financial strain, economists say.

While Iran’s decision has been welcomed by its allies and sympathizers as a positive step for Iraq, sceptics argue that resuming exports is far more complex than a political declaration. They point to complex web of technical, security and logistical challenges involving maritime risk, insurance costs, shipping company behavior and contractual arrangements.

Security concerns remain acute. Despite the Iranian exemption, four oil facilities in the southern province of Basra were targeted by drone attacks over the past two days, reportedly carried out by Iran-backed armed factions seeking to pressure foreign companies to leave Iraq. The incidents raise questions about the consistency between Tehran’s declared position and the actions of allied groups on the ground.

Former oil ministry spokesman Assem Jihad said Iraq’s export capacity is governed by “fundamental realities” that make a swift return to normal operations unlikely.

In comments posted on Facebook, he noted that Iraq does not rely on its own fleet of supertankers to export crude. Instead, the State Organization for Marketing of Oil (SOMO) sells oil under contracts whereby buyers arrange shipping and lift cargoes from Iraqi ports.

The key issue, he explained, is not a lack of contracts but the reluctance of global shipping companies and tanker owners to enter what is now considered a high-risk zone. Even if buyers are willing, securing vessels prepared to dock at southern Iraqi ports or operate near conflict areas remains a major obstacle.

Insurance costs have also surged. Companies face steep premiums for vessels transiting conflict zones, discouraging participation. “Even with statements allowing passage, that does not necessarily translate into a safe and secure shipping environment,” Jihad said, adding that insurers and shipping firms base decisions on actual risk assessments rather than political assurances.

He argued that exports would only resume once confidence returns to maritime markets, risks decline and insurance costs fall.

Economic researcher Ziad al-Hashimi outlined additional barriers preventing Iraq from benefiting from the Iranian decision.

Writing on X, he said Iraq’s oil production, service companies and southern export terminals are currently operating under “force majeure”, a status declared on March 20 across fields run by foreign firms. Lifting this clause could take time, as companies would require assurances that operations will not be targeted again.

“Its removal is not a quick process,” he noted, warning of “real risk” if exports resume without improved security guarantees.

Al-Hashimi also pointed to ongoing attacks on oil fields, saying that many service companies have evacuated staff and suspended operations. “Work will not return to normal as long as the war continues,” he underlined.

He further questioned the practicality of Iran’s exemption, which applies to loaded Iraqi tankers exiting Hormuz. “How will empty vessels enter the strait to reach Iraq, and who will guarantee their safety?” he asked.

The government and oil ministry have meanwhile faced criticism for failing to take precautionary measures to safeguard production, Iraq’s main source of national income. Critics say Baghdad should have diversified export routes or maintained floating storage capacity, as many oil-producing countries do.

According to Basra-based economist Nabil al-Marsoumi, Iraq’s state tanker company, established in 1972, currently owns just six vessels for refined products with a combined capacity of 117,000 tons. Four of these ships are over 15 years old, requiring more frequent maintenance.

The company no longer owns any crude oil tankers, he added, compared with 25 vessels totaling 1.485 million tons in 1983.

On the diplomatic front, Foreign Minister Fuad Hussein on Sunday thanked Iran for allowing Iraqi oil tankers to transit Hormuz during a meeting with Iranian ambassador Mohammad Kazem Al Sadeq.

A foreign ministry statement said the two sides discussed mechanisms to ensure implementation of the arrangement and broader regional developments. Hussein reiterated Iraq’s opposition to war and stressed the need for dialogue and peaceful conflict resolution.

Separately, data from the London Stock Exchange Group and analytics firm Kpler indicated that a tanker carrying Iraqi crude had passed through the Strait of Hormuz near Iran’s coast. The vessel, Ocean Thunder, loaded about one million barrels of Basra Heavy crude on March 2 and is expected to discharge in Malaysia in mid-April.

 

 



China Factory Activity Returns to Expansion Riding AI Global Boom

 A man stands next to a poster of a humanoid robot during the China International Supply Chain Expo (CISCE) in Beijing on June 25, 2026. (AFP)
A man stands next to a poster of a humanoid robot during the China International Supply Chain Expo (CISCE) in Beijing on June 25, 2026. (AFP)
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China Factory Activity Returns to Expansion Riding AI Global Boom

 A man stands next to a poster of a humanoid robot during the China International Supply Chain Expo (CISCE) in Beijing on June 25, 2026. (AFP)
A man stands next to a poster of a humanoid robot during the China International Supply Chain Expo (CISCE) in Beijing on June 25, 2026. (AFP)

China's factory activity returned to expansion in June, driven by demand for chips, computers and other AI-related products, as robust export orders and front-loading to the United States to get ahead of tariffs offset weakness elsewhere in the economy.

The data suggest global AI investment is providing an important cushion for manufacturers in China's $20 trillion economy, even as disruption from the Middle East conflict and a prolonged property slump continue to weigh on broader growth.

The official manufacturing purchasing managers' index (PMI) rose to 50.3 in June from 50.0 in May, according to a survey by the National Bureau of Statistics (NBS). It beat a median forecast of 50.0 in a Reuters poll.

"Exports to meet international demand for chips and other AI-related products, as well as front-loading to get ahead of new US Section 301 ‌tariffs due late ‌July and improved domestic demand due to lower upstream costs underpinned the improvement," said ‌Dan ⁠Wang, China director ⁠of consultancy Eurasia Group.

The number of domestic infrastructure projects ticked up over the last month too, she added. US retailers have brought forward orders from China by four to six weeks to secure their inventories for Black Friday and Christmas holiday sales before the expected tariff hikes later this year, shipping executives said.

The sub-index for new export orders returned to expansion in June, rising to 50.1 from 48.6, while the production and overall new orders gauges edged up to 51.4 and 51.2 from 51.2 and 49.9, respectively.

Factory gate prices slipped to 48.2 from 51.9 in May, however, following five months of expansion, with ⁠employment also continuing to trend downward.

"The export strength is set to continue, driven by ‌global AI investment demand," said Xu Tianchen, senior economist at the Economist Intelligence ‌Unit. "Second, more policy easing will come."

"For example, fiscal spending has lagged behind budget arrangements, and it should accelerate in the coming months. There ‌is also room for monetary easing," he added.

The non-manufacturing PMI, which includes services and construction, improved to 50.2 ‌versus 50.1 in May, while the composite PMI came in at 50.6 compared with 50.5 a month earlier.

AI BOOM OR BUST

With the property crisis showing little sign of stabilizing and household spending remaining subdued, policymakers face the challenge of managing a two-speed economy.

There is enormous international demand for semiconductors powering data centers and advanced electronics, playing to China's manufacturing strengths, but there does not seem ‌to be much demand for anything else.

Exports of furniture, for example, grew just 1.9% in value terms year-on-year, according to the latest trade data for May, while shipments of ⁠automated data processing equipment ⁠jumped 60% over the same period.

Furthermore, retail sales, a proxy for domestic demand, fell for the first time in over three years, the most recent data for May showed, along with a faster slump in new home prices.

Julian Evans-Pritchard, head of China Economics at Capital Economics, said the improvement "remains heavily dependent on exports and AI-related tech," and warned that "despite the improvement in activity, the manufacturing sector appears to be slipping back into deflation."

China has set a 2026 growth target of 4.5% to 5.0%, slightly below last year's 5% expansion.

With signs of precautionary buying in the wake of Middle East-related price pressures fading, input costs rising and overseas customers running down inventories while awaiting a ceasefire, Chinese manufacturers may increasingly need demand from the world's largest consumer market to regain momentum.

A closely watched meeting in May between US President Donald Trump and Chinese leader Xi Jinping, however, produced no meaningful breakthroughs, whether on tariffs or Beijing using its influence over Tehran to end the Iran war.

"The sluggish data from the past few months will likely result in a notable slowdown in second-quarter GDP," said Lynn Song, chief economist for China at ING.

"We're looking for a slowdown to 4.6% year-on-year, with risks slightly balanced to the downside."


EU's Side of US Trade Deal to Come Into Force on July 1

FILED - 03 June 2024, Berlin: FILE PHOTO - The European Union flag flies in the wind. Photo: Sebastian Gollnow/dpa
FILED - 03 June 2024, Berlin: FILE PHOTO - The European Union flag flies in the wind. Photo: Sebastian Gollnow/dpa
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EU's Side of US Trade Deal to Come Into Force on July 1

FILED - 03 June 2024, Berlin: FILE PHOTO - The European Union flag flies in the wind. Photo: Sebastian Gollnow/dpa
FILED - 03 June 2024, Berlin: FILE PHOTO - The European Union flag flies in the wind. Photo: Sebastian Gollnow/dpa

The European Union's side of a trade deal struck with the United States last year, which will remove import duties on many US goods, will come into force on July 1, said a formal European Union regulatory filing.

The EU said this ⁠regulation would apply ⁠from July 1 until December 31, 2029, Reuters reported.

"Where appropriate, the Commission shall submit together with the comprehensive assessment a legislative proposal to extend ⁠the period of application of this Regulation," added the regulatory filing.

Under the agreement, the EU agreed to remove import duties on US industrial goods and provide preferential access to US farm produce.

It will also extend duty-free imports of ⁠US lobster, ⁠a mini-deal struck with Trump during his first term as president.

The EU legislation expires at the end of 2029 and includes multiple safeguards that would allow the EU to suspend concessions if the United States breaches the trade deal's terms.


Saudi Real Estate Developers Move to Capitalize on New Foreign Ownership Rules

A general view of buildings and homes in the Saudi capital, Riyadh (File photo: Reuters)
A general view of buildings and homes in the Saudi capital, Riyadh (File photo: Reuters)
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Saudi Real Estate Developers Move to Capitalize on New Foreign Ownership Rules

A general view of buildings and homes in the Saudi capital, Riyadh (File photo: Reuters)
A general view of buildings and homes in the Saudi capital, Riyadh (File photo: Reuters)

Saudi Arabia's real estate market has entered a new phase of testing the practical impact of the executive regulations governing property ownership by non-Saudis, as listed developers move swiftly beyond welcoming the decision and the initial positive market reaction to translating it into strategic growth plans.

While the sector index has extended its early gains on expectations that the new rules will broaden international demand, the competitive advantage is beginning to shift toward companies with high-quality assets that are ready to be marketed and sold.

The real estate index on the Saudi stock market posted a sharp gain following the announcement, rising from 2,924 points to 3,044 points. The increase was driven by investor expectations that allowing non-Saudis to own property under specific regulations would expand demand for Saudi real estate assets, particularly in cities and projects with strong investment and religious appeal.

Real estate stocks led the market's gainers in the session following the announcement. Shares of Umm Al Qura for Development and Construction (Masar) hit the daily 10 percent limit, while Knowledge Economic City rose about 9.3 percent. Jabal Omar Development, Retal, Emaar The Economic City, and Makkah Construction and Development also posted strong gains.

Financial and economic adviser Dr. Hussein Al Attas told Asharq Al-Awsat that allowing non-Saudis to own property represents an important structural shift for Saudi Arabia's real estate market, but said the impact will not be uniform across all developers. Instead, the market will increasingly differentiate between companies with attractive assets and projects in locations targeted by international investors and those without them.

Master plan of the Masar Makkah destination (Masar)

He added that asset quality, location, financial strength, the size of developable land holdings, and the ability to attract international investors will be among the key factors determining how much companies benefit from the decision in the coming period.

Al Attas expects the sector to perform positively over the medium to long term. However, he said the real impact of the decision will ultimately be measured by companies' ability to turn this opening into actual sales, partnerships, and cash flows, rather than by the initial rise in share prices following the announcement.

In the first concrete move by a listed company since the regulations were approved, Jabal Omar Development on Sunday outlined its strategy for capitalizing on the decision after its project in Makkah was included within the geographic areas where non-Saudis are permitted to own property.

The company said the decision would broaden its base of potential investors and property owners among Muslims around the world, supporting demand for its real estate assets. It also announced plans to offer 400 existing hotel residential units for sale this year as the first phase of the program, with the proceeds earmarked to reduce debt and lower financing costs.

The company also plans to redesign the seventh and final phase of the project by increasing the number of hotel residential units available for sale while making greater use of off-plan sales programs to reduce financing requirements and strengthen reliance on internally generated liquidity.

Al Attas said the market's response to the regulations has unfolded in two stages. The first was a broad wave of optimism that lifted most real estate companies. The second has begun as investors seek to identify the companies best positioned to convert the decision into tangible growth in sales, cash flow, and profitability.

The decision to allow non-Saudis to own property forms part of a broader package of measures introduced by the Kingdom in recent months to restore balance to the real estate market and strengthen its investment appeal.

These measures include allowing the sale, purchase, and development of land in new areas north of Riyadh, increasing fees on undeveloped land, imposing fees on vacant properties, and freezing annual rent increases in Riyadh for five years.

The decision also coincides with signs of improving real estate and construction activity across the Kingdom. The construction sector returned to growth in May, supported by stronger residential building activity and renewed growth in new orders.

Although the full impact of the regulations will take time to emerge, recent moves by real estate developers indicate that the market has already begun shifting from expectations to execution as companies seek to attract a new segment of investors and buyers from outside the Kingdom.