Baghdad        -          Between plummeting oil prices, political deadlock and reduced global appetite for a bail-out, Iraq is on the cusp of financial calamity that could force austerity measures and renew anti-government protests.

But officials appear remarkably optimistic, a view experts described as being “in denial” given forecast oil crashes would cost Iraq two-thirds of its net income this year.

Brent oil prices tanked this week to $26 per barrel, the lowest since 2003, following a hit to global oil demand from the novel coronavirus outbreak and a price war between major producers Saudi Arabia and Russia.

Iraq, which relies on oil revenues for more than 90 percent of its revenues, was set to face “vast economic pressures,” said Fatih Birol, head of the International Energy Agency (IEA).

Iraq is the second-biggest crude producer in the OPEC oil cartel, and typically exports around 3.5 million barrels per day. Its draft 2020 budget was based on a projected price of $56 per barrel.

                  With prices slashed, Iraq’s net income would drop 65 percent in 2020 compared to last year, incurring a monthly deficit of $4 billion just to pay salaries and keep the government running.

                  “In the current crisis, Iraq’s oil revenues will struggle to break $2.5 billion per month,” said Birol, appealing to Iraqi officials to find “urgent solutions.”

                  That projection was based on a price of $30 per barrel before the latest drop, making it a bullish outlook.

                  Top officials told AFP the finance and oil ministries, Central Bank of Iraq (CBI) and state-owned banks were exploring ways to trim costs and find financing.

                  “There is some anxiety, but it’s not acute,” CBI governor Ali Allaq told AFP.

                  “Oil prices will not stay at this level. We don’t expect them to go up a lot, but enough to secure the required amount,” he said.