In a series of strategic moves away from U.S. influence, Iraq has solidified its ties with Russia and China, marking a major shift in the geopolitical landscape with significant economic implications.
Perhaps creating the final impetus for a revaluation (RV) of the Iraqi Dinar (IQD).
As the U.S. focuses on the Israel-Hamas War, China and Russia have strategically expanded their presence in Iraq, aiming to capitalize on its potential as a major crude oil producer and a vital link in the logistical network connecting Eurasia to Europe.
Recently, in a key Cabinet meeting chaired by Prime Minister Mohammed Shia Al-Sudani, Iraq took a major step towards increasing its oil production and exports to China.
The Cabinet agreed to boost crude oil exports to China by 50%, raising the daily production capacity of Iraq’s largest oil field, Rumaila, to 1.4 million barrels per day.
This is part of Iraq’s ambitious plan to reach 8 million barrels per day by 2028.
Simultaneously, Iraq pledged full support for the ‘Iraq-China Framework Agreement’ signed in December 2021, resembling the comprehensive ‘Iran-China 25-Year Comprehensive Cooperation Agreement.’ Central to these agreements is China’s priority access to Iraqi oil, gas, and petrochemical projects, coupled with a substantial discount on purchases.
China will also be permitted to establish factories across Iraq, supported by extensive infrastructure development, including crucial railway links aligned with China’s ‘Belt and Road Initiative.’
As these agreements unfold, the presence of Chinese security personnel, backed by Iranian counterparts from firms like Khatam al-Anbia, will be prominent at key project sites.
Furthermore, Russia’s long-term plans to exert influence in Iraq have advanced, with Prime Minister Al-Sudani meeting Russian President Vladimir Putin in Moscow.
Discussions extended beyond the oil sector to include the future of oil exports from Kurdistan to Turkey, where Russia’s Rosneft plays a pivotal role. Iraq’s Deputy Prime Minister for Energy and Oil Minister also engaged with Gazprom Neft to discuss upcoming oil and gas projects.
These developments signal a major shift in Iraq’s alliances and geopolitical positioning.
As China and Russia deepen their involvement, the Iraqi Dinar could see a strengthening exchange rate, driven by increased oil production, strategic partnerships, and the infusion of foreign investments into the country’s infrastructure.
As this strategic shift continues to play out, we will likely witness a transformed economic landscape for Iraq, perhaps finally leading to a revaluation of Iraqi Dinar.
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