Iraq’s oil sector cuts have started as the government plans urgent savings in 2026. Oil Minister Hayyan Abdulghani announced that upstream spending will drop to help protect the country’s budget. The oil sector cuts highlight Baghdad’s concern over lower oil prices.
The ministry aims to reduce $1.4 billion from oil field budgets nationwide. State and international oil companies must adjust spending without affecting production. Therefore, companies are now reviewing their projects and operations carefully to meet the new targets.
Oil Minister Hayyan Abdulghani met with Deputy Minister for Upstream Bassim Mohammed Khdair and BP Iraq President Zaid Elyaseri in Baghdad on January 26. They discussed upstream project expenses and how companies can manage costs efficiently while keeping production steady.
State oil company officials confirmed that the austerity plan applies to all approved field budgets from late 2025. This includes fields run by international oil companies, which now need to find savings quickly. Consequently, many planned investments may be delayed or scaled down.
Analysts said that the cuts are a sign of broader fiscal pressure. Iraq depends heavily on oil revenue, so low global prices make it harder to fund government programs and infrastructure projects. Therefore, reducing upstream spending is a necessary but cautious step.
The ministry emphasized that production will not be affected despite the cost cuts. Officials added that the goal is to protect Iraq’s oil output and meet international commitments while adjusting to financial challenges.
Experts predict that the oil sector cuts may continue if oil prices remain low. They also said companies might need to focus on efficiency and technology to maintain output while spending less.
Overall, Iraq’s oil ministry is balancing fiscal responsibility with energy production. The oil sector cuts demonstrate a careful approach to safeguarding revenues and to ensuring the country remains a reliable global oil supplier.
