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Iraq is caught between deepening US-Saudi military strikes against Iran-backed militias and a diplomatic balancing act with Tehran, while the economy attracts major Western oil investment despite security disruptions.
July 2026
Week of Jul 20, compared to 12-week average
Iraq's oil sector is attracting major Western investment, with ConocoPhillips buying a 42% stake in BP's project and Chevron set to sign MOUs for West Qurna 2 and Nassiriya. However, a drone attack suspended oil loading at Basra port, and oil is being trucked through Syria as a legacy of Hormuz disruptions.
Iraq's prime minister is courting both Washington and Tehran, visiting the White House and Tehran within weeks, signing agreements with Iran. Yet Baghdad condemned US-Saudi strikes as a sovereignty violation, while Saudi Arabia warns of further strikes if Iran-backed groups attack.
US and Saudi forces struck Iran-backed groups in Iraq, killing 20 PMF members and prompting an emergency security meeting led by the Iraqi PM. Drone attacks and explosions near Erbil airport underscore persistent militia activity, while ISIS is reportedly poised to exploit the US exit.
Shia religious fervor dominates Iraqi society, with massive funeral processions for Khamenei drawing thousands and Arbaeen pilgrim security assured. A reported face-off between Iraqi Shiites and Hezbollah signals internal sectarian friction.