Iraq recorded a fiscal deficit of $5 billion in the first four months of 2026 after the Iran war severely curtailed oil export revenues, heaping pressure on the new government to pass a budget it has yet to approve.

Spending over the period stood at $28.2 billion against revenues of $23.2 billion, according to the finance ministry. Oil revenues accounted for $19.4 billion of total income, with the remainder coming from customs duties and government fees. Civil servant wages were the single largest item of expenditure at $15.3 billion — more than half of all spending.

"There is a pressing need for the new government to work to release a full budget because the delay will hurt growth and projects," said Nabil Al-Marsoomi, an economics professor at Basra University. "The absence of a budget limits the government's ability to confront the financial crisis, as its approval provides legal cover for internal and external borrowing, as well as liquidity management through the central bank."

The revenue shortfall stems directly from the disruption to oil exports caused by Iran's near-closure of the Strait of Hormuz, which left Iraq pumping as little as a third of the roughly 3.4 million barrels per day on which last year's budget was based. The government has been spending at a monthly average of just over 8% of last year's total expenditure as a result.

Parliament has submitted a proposal for an emergency budget of between $14.9 billion and $22.4 billion to keep government offices running and protect already-awarded contracts. However, the cabinet of Prime Minister Ali Al-Zaidi, who took office in mid-May, has held only a handful of meetings and has yet to make a decision on a new budget.

OPEC has forecast global oil demand will climb from 105 million barrels per day in 2025 to 113 million bpd by 2030, calling for annual investment of more than $700 billion in the sector to meet long-term needs.

The projections were published in the group's 2026 World Oil Outlook, launched at the OPEC Secretariat in Vienna. The report sees oil demand rising to 119 million bpd by 2035 and 124 million bpd by 2050, with no peak in sight. Overall global energy demand is projected to rise 23% by 2050, driven by expanding economies in India, the Middle East, Africa and Latin America, as well as policy shifts in the US and Europe expected to favour continued oil consumption.

"For oil alone, investments of $17.7 trillion from 2026 to 2050 — or over $700 billion per annum — are needed to meet long-term demand," said OPEC Secretary-General Haitham Al Ghais, adding that the scale of global energy needs requires sustained investment across all energy sources and technologies.

The outlook lands at a volatile moment for energy markets. The Iran war earlier this year pushed oil prices as high as $120 a barrel in March, while a peace agreement announced by US President Donald Trump this week sent prices sharply lower. Brent crude was trading at $79.42 a barrel on Friday.

The report also noted a broader shift in the global energy policy landscape, with increased emphasis on energy security and affordability driving policy adjustments expected to support oil demand in the medium and long term.

The findings come as OPEC navigates a period of internal change. The UAE announced its departure from both OPEC and the wider OPEC+ grouping in April.

Iran’s central bank said it will release $2 billion in foreign currency for the industrial sector from Saturday, after gaining improved access to frozen overseas assets and benefiting from an easing of restrictions on oil exports under a temporary U.S.-Iran arrangement.

The move comes as Tehran tries to stabilize its economy, where foreign-exchange shortages have fed inflation and made it harder to pay for imports of essential goods.

Central Bank Governor Abdolnasser Hemmati said the bank would channel part of its stronger reserves into the economy, with the initial allocation aimed at supporting industrial imports and helping contain price pressures. The broader deal is tied to a 60-day U.S. sanctions waiver that allows Iranian crude and petroleum exports to resume more freely, while also improving access to some of Iran’s frozen funds abroad.

The timing matters because oil exports are Iran’s main source of hard currency, and any sanctions relief can quickly improve the central bank’s room to maneuver. However, the relief is temporary and does not amount to a full removal of sanctions, so the durability of the funding boost will depend on how the wider negotiations develop.

But it does highlight the geopolitical leverage embedded in oil sanctions. By loosening pressure on Iran’s export revenues, Washington has signaled a pragmatic willingness to test engagement, even as the broader confrontation over Iran’s nuclear and regional role remains unresolved.

The Financial Action Task Force (FATF) has placed Iraq on its grey list of countries with deficiencies in anti-money-laundering and counterterrorism financing laws, while keeping Kuwait on the list despite recent reforms. Algeria, by contrast, was removed after regulators acknowledged its progress.

The Paris-based watchdog, which met on Friday, said Iraq requires work on managing cash-related risks, increasing money-laundering and terrorist-financing investigations, and making better use of financial intelligence.

"Iraq has been added to the grey list as work is needed to tackle risks related to cash, increase money-laundering and terrorist-financing investigations and enhance the use of financial information," said FATF president Elisa de Anda Madrazo.

The listing comes as Iraq's new prime minister, Ali Al-Zaidi, who took office in May, has made economic rebuilding, foreign investment, and anti-corruption central to his agenda. In a related development, Al-Zaidi recently replaced long-serving central bank governor Ali Al-Allaq with Nizar Hussein, a former lawyer who previously headed the central bank's anti-money-laundering and terror-funding unit.

"This move will send a positive signal to the West. I also believe the central bank will pursue its plan to overhaul the banking sector," said Nabil Al-Marsoomi, an economics professor at an Iraqi university.

Iraq, OPEC's second-largest oil producer, has been working to restructure a banking sector weakened by bad loans and decades of corruption. Parliament passed the country's first anti-laundering and terror-financing law in 2015, and authorities received over 2,700 reports of suspected financial crimes in the first half of 2025 alone.

Kuwait, meanwhile, remains on the grey list despite closing nearly 73,700 companies that failed to disclose their beneficial owners and introducing a series of tighter financial regulations over the past two years. The Gulf state first enacted comprehensive anti-laundering legislation in 2013 under Western pressure, with penalties including fines and prison terms of up to ten years.

"The measures taken by Kuwait in the past period are the most drastic in many years. I believe it is a matter of time before Kuwait is removed from the FATF grey list," said Ali Al-Enzi, manager of Al-Manakh economic consulting centre in Kuwait.

Algeria's removal from the list follows progress in risk-based supervision, beneficial ownership transparency, and targeted financial sanctions. Key measures included a central bank circular banning cash deposits into corporate bank accounts, introduced in December, and tighter oversight of the gold and jewellery trade, where dealers are now required to report suspicious transactions immediately to Algeria's Financial Intelligence Unit.

FATF, founded in 1989 on a G7 initiative, publishes its black and grey lists three times a year. Algeria had been placed on the grey list in late 2024.

The UAE’s Ministry of Finance has launched its inaugural sovereign retail Treasury sukuk (T-sukuk) programme to broaden participation of retail investors in government investment instruments.   

The government-backed, Shariah-compliant investment instrument offers a minimum subscription amount of $373, equivalent to 1,000 Emirati dirhams, and will be delivered through an IPO-style subscription framework, state-run news agency WAM reported.

The media body said that details of the debut issuance, including its profit rate, tenor and subscription period will be announced shortly. However, it added that the Shariah-compliant instrument will be traded on Nasdaq Dubai following its listing. 

“This will support greater participation by individual investors in local capital markets, enable them to trade sukuk within a regulated marketplace, and provide enhanced flexibility in managing their investments after the subscription and allocation stages,” the statement added. 

Emirates NBD Bank has been appointed as the lead receiving bank, whilst Emirates Islamic Bank, Abu Dhabi Islamic Bank, Ajman Bank, and Mashreq Bank will serve as receiving banks.

The programme will add to the government’s investment product ecosystem, enabling individual investors to diversify their investment portfolios through a sovereign-backed instrument. 

Mohamed bin Hadi Al Hussaini, minister of state for financial affairs, said that the programme fosters a culture of saving, financial planning, and long-term investment. 

Gulf economies are expected to grow significantly in 2027 after suffering an economic slowdown in recent months caused by the Iran-US conflict. 

The GCC (Gulf Cooperation Council) economies are expected to grow by 8.1% next year, with energy flows, tourism and investor sentiment to gradually normalise as war disruptions subside, the Institute of Chartered Accountants in England and Wales (ICAEW) and Oxford Economics said in a new report. 

Regional economies incurred substantial economic damage as the conflict's shockwaves, whether through missile strikes on critical energy and oil architecture, disrupted shipping lanes, or upended trade and aviation networks, swept through markets, industries and countries. 

Saudi Arabia’s national output for the first quarter slowed to 3% year on year and non-oil activities expanded at its slowest pace since the Covid-19 pandemic. The kingdom’s seasonally adjusted GDP contracted 1.2% quarter-on-quarter driven by a 6.8% fall in oil activities as the Strait of Hormuz disruption hit late in the quarter, the Middle East's economic update revealed. 

Barring Oman, all GCC producers alongside Iran and Iraq, have suffered extensive energy production losses, with overall production having dipped to half of pre-war levels. Decoupling efforts, including Saudi Arabia's East-West Pipeline and the UAE's Habshan-Fujairah pipeline, have helped prevent an even larger plunge in output. 

Meanwhile, economies such as Kuwait, Iran, Iraq and Qatar, bore the brunt of the conflict, for their inability to avoid the disruption to regional shipping, war-driven infrastructure damage and tourism losses. 

“We forecast GCC oil sector output to contract by 14.5% this year, which will mark the steepest decline in several decades. We then expect a 23.5% rebound next year, driven largely by normalisation from a severely depressed base,” the report added. 

Non-oil activity in Saudi Arabia and the UAE, however, appears on a rebound with May PMI surveys reporting the strongest output levels in three months, driven by improved domestic demand. 

“Overall, we expect a 1.1% contraction in GCC non-energy sectors this year - compared to 4.2% growth pre-war - and a gradual recovery over the rest of the decade,” the study stated. 

The Middle East is expected to contract 4.1% this year, surpassing the downturn witnessed during the first year of the Covid-19 pandemic, according to the study. Iran’s GDP is likely to shrink by 10.8% this year, while Iraq’s economy is estimated to contract further by around 22% in 2026, with a sharp 33% rebound in 2027 as oil exports normalise. Lebanon faces a 6.5% contraction in 2026 amid ongoing Israeli strikes, occupation in the south of the country and forced displacement of 20-25% of the population, the report added. 

“By contrast, Syria continues to reintegrate into the global economy after more than a decade of civil war. We anticipate GDP growth to average 9.6% over 2026-2027, supported by renewed investment,” the study said. 

Oil prices have risen around 10-12% since the conflict began on February 28, hitting a year-high peak of $115 in late March before easing to around $86 on June 12. Brent prices stood at $78.5 at 11.27pm GMT time on June 18.  

“In our baseline forecast, we expect oil prices to remain above pre-war levels as exports gradually normalise, with Brent oil price averaging around $90 per barrel this year. In the medium term, we expect oil prices to be slightly lower than our pre-war baseline, as the UAE’s departure from OPEC+ allows for a gradual increase in its output towards the 5mn barrel per day production target once trade normalises,” the study adds. 

Türkiye has announced its new artificial intelligence plan under which it aims to increase its national data centre capacity to one gigawatt by the end of the decade. 

The country will mobilize at least $10 billion in private-sector investment for data centres, cloud computing, and AI infrastructure under the new plan, Turkish President Tayypi Erdogan announced at the Türkiye Artificial Intelligence Summit held in Istanbul last week. 

The AI action plan is grounded in four key pillars – discover, benefit, produce and govern – with four complementary actions under each pillar. 

Pursuant to the plan, the government aims to train 10,000 advanced AI specialists, 100,000 AI application professionals, and dedicate at least 2% of public investment programs to AI projects. AI literacy workshops will be launched in all 81 provinces to train five million citizens within two years.

The premier also announced plans to make at least 2,000 public datasets available to citizens through a National Data Library, including data from sectors such as health, agriculture, defense, and e-commerce.

“We will launch the National Artificial Intelligence Literacy Program to ensure that people of all ages understand artificial intelligence correctly and use it safely,” Erdogan said.

Turkiye has launched a national technology initiative, via which it is looking to build and own its own tech models.

The beta version of Turkiye’s first open-source national large language model (LLM), T3AI, was launched last year. The government introduced BILGE, its latest LLM to the audience at the AI summit.  

The country also unveiled a $1.26-million- initiative last year to develop Turkish LLMs to advance homegrown navigation and mapping technologies.