Gasoline and dollar queues are the first signs... Is Iraq entering a tunnel of economic turmoil?
The ongoing conflict between the United States and Israel on one side, and Iran on the other, has quickly cast a shadow over the overall situation in Iraq, particularly the economic aspect. Concerns related to energy markets and supply chains have resurfaced, with growing anxiety about the impact of any escalation of the conflict on oil exports, shipping routes, and the stability of the domestic market in a country almost entirely dependent on imports.
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The exchange rate of the dollar has also seen a significant increase in Baghdad's Al-Kifah Street market, exceeding 160,000 dinars per 100 dollars, alongside a sharp rise in the prices of both foreign and Iraqi gold in the markets of Baghdad and Erbil. In a tangible indication of the "shock" spreading domestically, Iraqi cities witnessed signs of a fuel crisis. For example, the city of Fallujah in Anbar province saw long queues at gas stations, revealing the public's sensitivity to any development that might be perceived as a direct threat to supply chains or transportation between provinces.
The government
, for its part, attempted to offer reassurances to alleviate the confusion. The Ministry of Trade affirmed that the food situation in Iraq is "stable and under control," and that there are no indications of concern regarding the availability of food in the markets following the Israeli-American attack on Iran.
Ministry of Trade spokesman Mohammed Hanoun stated that "the government has given great attention to the food security file in anticipation of emergency circumstances, and has worked during the past period to strengthen the strategic reserves of basic commodities, especially wheat, in addition to ration card items such as rice, sugar, and oil." He emphasized that "the stock is good and sufficient to meet citizens' needs within a plan aimed at ensuring continued supply and market stability, with daily monitoring of market activity to prevent exploitation and price hikes."
Economically, "energy sensitivity" appears to be the most prominent issue. Iraq may theoretically benefit from higher oil prices, but at the same time, it faces the risks of disruptions to export routes, shipping, and insurance, along with the accompanying pressure on internal stability and prices, especially if the war escalates to a stage where economic infrastructure or maritime routes are targeted.
What about the Strait of Hormuz?
Economist Safwan Qusay warns Al-Mada that "expanding the scope of the war in the Middle East to include economic targets and closing the Strait of Hormuz will lead to a rise in global oil prices, forcing Baghdad to confront the challenge of managing risks, not merely monitoring figures."
Qusay believes that "Iraq needs options to mitigate the potential shock, including reaching an understanding with Saudi Arabia on arrangements to secure supplies in case some routes are disrupted, or relying on the reserves of the Central Bank of Iraq to ensure the financing of public spending for a period that may exceed six months if the crisis enters a phase of severe pressure." Qusay goes further, discussing logistical alternatives, such as "expanding export routes towards Turkey by utilizing the Kirkuk-Ceyhan pipeline and its capacity, with the possibility of boosting exports by truck to Jordan, Kuwait, or Turkey, depending on developments in the security and trade situation."
Warnings of a more dangerous scenario .
In this context, political analyst Mohammed Naanaa told Al-Mada that "Iraq must prepare for the repercussions and consequences of a war with Iran, especially if the war escalates or the Iranian regime loses control of the internal situation." He warned that the most dangerous scenario is the possibility of the war leading to widespread internal disintegration, which could open the door to large waves of displacement towards the Iraqi border.
Naanaa stressed the necessity of "taking all necessary precautions to confront potential challenges and threats, including administrative and security preparedness and the management of resources and services in the provinces near the front lines."
According to field observations, Iraqi markets remain in a phase of "anticipation and questioning" rather than an actual crisis. However, observers note that this phase could change rapidly if the war continues and expands, especially given the sensitivity of consumer sentiment towards fuel and basic commodities, and the potential for rumors to ignite excessive buying that would disrupt the market even if stocks are stable.
Netanyahu: Together with Washington, we will deliver a decisive blow to the Iranian regime.
Israeli Prime Minister Benjamin Netanyahu announced on Sunday evening that joint efforts with the United States would allow Israel to deliver a decisive blow to the Iranian regime.
Netanyahu said that Israeli forces are now striking the heart of Tehran with increasing force, stressing that the pace of the strikes will increase even more in the coming days.
He added that he had issued instructions to continue the campaign against Iran, noting that Israel is facing difficult days and is waging a campaign in which the full strength of the Israeli army is being harnessed.
Iran's "Interim Leadership Council" meets with Pezeshkian, Ejei, and Arafi in attendance
The Iranian interim leadership council held its second meeting on Sunday (March 1, 2026) since its formation.
The Iranian news agency Tasnim reported that "the second meeting of the 'Interim Leadership Council' was held in Iran with the participation of Pezeshkian, Ejei and Arafi."
Iranian President Masoud Pezeshkian announced on Sunday (March 1, 2026) the start of the duties of the interim leadership council that was formed to assume the duties of the Supreme Leader in accordance with Article 111 of the Constitution, stressing Iran’s steadfastness in performing its duties and responsibilities despite the challenges.
Pezeshkian explained in a press statement followed by “Baghdad Today” that “the pain of the martyrdom of the wise leader of the Islamic Revolution will continue to resonate in the minds of the Iranian people for a long time,” stressing that “the crimes of the criminals and the martyrdom of Iran’s loved ones will not deter the determination of the government of the Islamic Republic of Iran to perform its duties and responsibilities.”
He added that "Iran is steadfast in following the path of pride, independence, and glory for beloved Iran," calling on the people to take action to confront the American-Zionist expansion that may target all Islamic countries after targeting Iran.
Trump: Saudi Arabia is also fighting in Iran's war
US President Donald Trump revealed that Saudi Arabia is participating alongside the United States in the ongoing military confrontation with Iran, confirming that the fighting could last for about four weeks.
In a telephone interview, Trump explained that he had made contact with the leaders of Bahrain, Saudi Arabia, the UAE, Qatar, and Jordan. In response to reports that Saudi Arabia might carry out attacks against Iran after being targeted previously, Trump said that they “are also fighting,” reflecting an advanced level of military coordination between Washington and its allies in the region.
Regarding the duration of the war, the US president predicted that military operations would last approximately four weeks, explaining that this timeframe had been in place since the beginning of the planning, with the possibility that it would end in a shorter time.
Trump confirmed that operations are “proceeding according to plan,” stressing continued communication with regional partners amid ongoing military escalation.
The Iraqi parliament postpones its session until further notice.
The Iraqi parliament decided on Sunday to postpone its scheduled session until further notice.
The council's media department stated in a brief statement received by Al-Sa'a Network that "the council decided to postpone its session scheduled for today until further notice."
Strike kills four Iran-backed fighters, anger mounts in Iraq
Four Iran-backed fighters were killed on Sunday when their base in a central Iraq province was struck, following other strikes in southern Iraq on Saturday
Four Iran-backed fighters were killed on Sunday when their base in Iraq was struck as the region became embroiled in violence after the United States and Israel launched strikes on Iran.
The fighters belong to the Hashed al-Shaabi, or the Popular Mobilisation Forces (PMF), an alliance of factions now integrated into the regular army, which also include powerful Iran-backed groups.
Baghdad, a key ally of Iran, has announced a three-day mourning period for Iran Supreme Leader Ali Khamenei, who was killed in a strike on Tehran on Saturday.
Iraq, which has recently regained a sense of stability but has long been a proxy battleground between the US and Iran, warned that it did not want to be dragged into the war.
But it did not remain unscathed.
An Iraqi security official told AFP that an air strike in the central Diyala province killed four fighters from the PMF, with another eight injured.
A PMF source confirmed "the martyrdom of four fighters in an attack on their base" in Diyala.
The Hashed al-Shaabi later said the fighters were killed in a "Zionist-American bombing", and posted photos from their funeral, where mourners carried Iranian and Iraqi flags.
Earlier Sunday, Iran, which has been targeting the Gulf states and Israel with a barrage of missiles, said it also hit US bases in Iraq's Kurdistan.
US defence systems later intercepted at least two drones over the city of Erbil, the capital of the autonomous Kurdistan region, which hosts US-led coalition troops, an AFP journalist said.
Explosions were heard and smoke was visible in the sky, the journalist reported from near the US consulate in Erbil.
Like the US, Iran wields significant influence in Iraqi politics, while also backing armed groups whose power has grown both politically and financially.
'Embassy of evil'
Several Iran-backed Iraqi armed groups said Saturday they would not remain "neutral" and would defend the Islamic republic.
The powerful group Kataeb Hezbollah said it would attack US bases after two of its fighters were killed in air strikes in southern Iraq.
Also Saturday, US-led coalition forces downed several missiles and explosive-laden drones over Erbil, local authorities said.
Pro-Iran groups later said they launched dozens of drones against "the enemy bases in Iraq and the region", without providing further details.
The US embassy in Iraq urged its nationals to limit movement and be ready to shelter after "reports of missiles, drones or rockets in Iraqi airspace".
On Sunday, hundreds of protesters, many masked and dressed in black, tried to storm Baghdad's Green Zone to get to the US embassy.
They chanted "for you Khamenei" and hurled stones at security forces, who responded with tear gas, AFP journalists reported.
Abu Ali al-Kanani, 56, who was leading a group of protesters, said "we are here to demand the expulsion of the Americans and the closure of the embassy of evil -- America that killed Ayatollah Khamenei".
Calls were renewed for protests near the embassy later in the evening.
Iraq's top Shia cleric Grand Ayatollah Ali Sistani, himself born in Iran, mourned Khamenei, and said that "the great Iranian people are expected to maintain their unity, to stand firm and thwart the aggressors' sinister goals."
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The geopolitical earthquake in Iran: The repercussions of Khamenei's assassination on Iraq and the region
The attack launched by the United States and Israel on Iran in the early hours of Saturday, February 28, 2026, sparked widespread anxiety and tension in the Middle East, at a time when the region is experiencing one of its most sensitive and dangerous phases. With Iranian state television confirming the death of Supreme Leader Ali Khamenei, the event can no longer be interpreted as a mere military strike, but rather as a potential geopolitical earthquake that will reshape the balance of power in the Middle East.
Reports on the Iranian political landscape speak of a significant power vacuum left by Khamenei, who effectively ruled the country for over 35 years. In this context, despite statements by Iranian President Masoud Pezeshkian and Parliament Speaker Mohammad Bagher Ghalibaf regarding managing the current phase, assessments of actual decision-making processes indicate a growing role for security and military institutions, particularly the Revolutionary Guard, as the most capable actor in controlling internal affairs and directing military responses in the near term.
In contrast, statements by US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu suggest that the strikes go beyond the logic of limited messages and are heading towards a broad dismantling of Iran’s nuclear and missile capabilities and its leadership structure, with American and Israeli talk of pushing the Iranians towards internal political change.
Multiple reports indicate that the circle of war is widening. Iran has responded with missile and drone attacks targeting US-linked sites and bases in the Gulf, as well as strikes toward Israel, amid growing concerns about threats to navigation in the Strait of Hormuz and the resulting energy and economic repercussions for the region.
In light of the rapid developments, the following can be expected in the short term: an escalation of air strikes is expected to be launched by the United States and Israel against nuclear facilities and missile manufacturing or storage sites, in exchange for Iran continuing to target American bases and interests in the region, particularly in Iraq and Syria, due to geographical proximity and overlapping spheres of influence.
Internal movements may see some opposition groups inside and outside the country as an opportunity to put pressure on the regime, which raises the likelihood of widespread demonstrations, in parallel with tightened security measures to prevent slipping into an internal vacuum.
- The economy and energy sector: With the potential threat to the Strait of Hormuz or disruption to some oil flows, oil prices are likely to rise sharply, and insurance and shipping costs will increase, coinciding with disruptions to air traffic in the Middle East. - Diplomacy falters: Despite international calls for de-escalation, a ceasefire appears difficult in the initial days, given Washington and Tel Aviv's insistence on maintaining military pressure and Tehran's threats of a harsh response.
The direct repercussions of the war on Iraq and the Kurdistan Region: It can be said that Iraq and the Kurdistan Region are on the front lines of the effects of this war due to their geographical location and the presence of American forces within the coalition arrangements.
- A direct conflict zone: Targeting bases or the vicinity of bases in Anbar and northern Iraq raises the likelihood of some Iraqi geography turning into an indirect or direct conflict zone, including Harir base near Erbil and Ain al-Assad base in Anbar.
The movement of armed groups is expected to escalate attacks by Iraqi factions loyal to Iran against US military and diplomatic interests inside Iraq and the region in response to the developments.
- Tightened security measures are expected around the Green Zone in Baghdad as the situation becomes more sensitive and there are more possibilities of protests or targeting attempts.
- A political crisis: Continued escalation will put the Iraqi government under pressure to balance its relationship with Washington and internal forces that oppose it, with the widening margin of division regarding regional positioning.
- Paralysis of aviation and trade with the closure of Iraqi airspace and the suspension of flights from airports including Erbil, tourism, trade and supply chains are being dealt a direct blow.
- Inflation of goods: Iraq and the Kurdistan Region rely heavily on imports from Iran, and any prolonged disruption to the borders or transportation will translate into higher prices and relative scarcity of some goods.
- A displacement crisis could arise if Iran descends into widespread chaos or internal conflict, potentially triggering a wave of displacement towards the Kurdistan Region, particularly from predominantly Kurdish areas in western Iran, thus adding humanitarian and security burdens to the region.
Statement from the US Embassy in Baghdad regarding the demonstrations near the Green Zone
The US Embassy in Baghdad issued a security alert on Sunday (March 1, 2026) regarding demonstrations taking place in areas near the Green Zone in the Iraqi capital.
The embassy said in a statement received by "Baghdad Today" that "the US mission in Iraq advises American citizens to exercise extreme caution, limit their movements, and remain in their places of residence when necessary, given the continued reports of missiles, drones, or projectiles being detected in Iraqi airspace, and to monitor active threats to US interests, including restaurants, businesses, and individuals."
The statement noted that "the southern bank of the July 14 Bridge in Baghdad is witnessing anti-American demonstrations, along with calls for demonstrations in various parts of the country, warning of the possibility of the gatherings turning into acts of violence, in light of a security situation that the embassy described as 'complex and rapidly changing'."
As a precautionary measure, the US mission directed its staff who are able to work from home to do so until further notice, and consular operations, including routine services for US citizens, were temporarily suspended.
She emphasized that "the Level 4 travel warning for Iraq (Do Not Travel) remains in effect, urging American citizens not to travel to Iraq for any reason, and to review their personal security plans if they are already in the country, and not to rely on the U.S. government for departure or evacuation operations."
The statement noted that "Iraqi airspace is currently closed, with the possibility of it being reopened or closed again at short notice," and called on "travelers to contact airlines for the latest information."
The embassy clarified that "work at its headquarters in Baghdad and the US Consulate General in Erbil continues on a limited basis and is restricted to essential operations only."
The embassy, according to the statement, urged “American citizens to enroll in the Smart Traveler Enrollment Program (STEP) to receive security updates, prepare contingency plans, ensure adequate basic necessities, keep their communication devices charged, avoid large gatherings and areas frequented by foreigners, and follow local media to stay informed of developments.”
Iraqis call for march to 'uproot' US embassy in Baghdad
Groups linked to Iraq's Islamic Resistance factions have called for a mass gathering aimed at storming the US embassy in Baghdad on the evening of March 1, 964 Network reported.
A body calling itself the "Central Popular Committee" issued a statement setting 8:30pm local time as the starting point for a march from Baghdad's Suspension Bridge toward the Green Zone, with the stated aim of "uprooting the embassy of evil."
Angry protesters had already gathered at the Suspension Bridge earlier on March 1 in an attempt to breach the Green Zone and demonstrate outside the US embassy over the killing of Iranian Supreme Leader Ayatollah Ali Khamenei.
Iraqi security forces dispersed the crowd using tear gas and water cannon.
The committee's statement expressed what it called "absolute solidarity" with Iran and described the planned march as "the beginning of our response to the aggression and violation of sovereignty, and the least we can offer."
The call came as Iraq's Islamic Resistance separately announced it had carried out 16 drone operations against US bases in Iraq and the wider region on March 1.
Kata'ib Hezbollah, one of Iraq's most prominent Iran-backed armed groups, threatened to wage a prolonged war of attrition against American forces in the region.
Earlier on Iraqi security forces used tear gas and water cannon to disperse protesters attempting to reach the US embassy inside Baghdad's Green Zone on March 1, Shafaq News reported.
The clashes were concentrated at the Suspension Bridge, where demonstrators tried to breach concrete barriers that authorities had erected overnight. Riot police pushed crowds back from the security fortifications around the presidential zone.
Video footage showed riot control units working to keep the crowds away from the Green Zone's perimeter, with tensions remaining high at the entrances to the heavily fortified area that houses the US diplomatic mission and Iraqi government buildings.
Several Iraqi armed factions have declared their entry into the regional conflict alongside Iran, announcing 16 drone operations against US positions in Iraq and the wider region, Al-Araby Al-Jadeed reported on March 1.
The Islamic Resistance in Iraq, an umbrella group for multiple armed factions, said dozens of drones were used in the operations targeting what it described as "enemy bases in Iraq and the region," without providing further details on specific targets or damage.
The move places Iraq in a precarious position amid what it described as a constitutional vacuum and a caretaker government, raising the prospect of serious security and political complications.
Kata'ib Hezbollah's operations command said it would soon target US bases across the region in response to American actions, while Abdulqader al-Karbalaei, military deputy of the Nujaba Movement, called on fighters to prepare for "sacred battle" in defence of Iran.
Trump: The new leadership in Iran wants dialogue and has agreed to talk with them.
US President Donald Trump confirmed on Sunday that the new leadership in Iran has expressed a desire for dialogue, indicating that he will speak with them soon.
Trump told The Atlantic magazine, as reported by Shafaq News Agency, that he could not specify an exact time for the start of negotiations, noting that some of the Iranians who participated in the rounds of negotiations during the last few weeks had passed away.
He added that Iranians took to the streets cheering and celebrating what had happened, as he put it.
Earlier today, the Hebrew newspaper Yedioth Ahronoth reported that Trump is considering ending the military operation against Iran quickly, after it resulted in the killing of Supreme Leader Ali Khamenei and a number of the most prominent leaders of the military establishment, including the Minister of Defense, the Chief of Staff, and the commander of the Revolutionary Guard.
The United States and Israel launched a war on Iran on Saturday, targeting top Iranian leaders, starting with Supreme Leader Ali Khamenei, his advisor Ali Shamkhani, and military leaders such as the Minister of Defense and the commander of the Revolutionary Guard, through hundreds of missile strikes and suicide drone attacks.
In turn, Iran responded by targeting Israel and American bases in the Gulf states and the Kurdistan region, and then began bombing towers and airports in some Gulf states such as the UAE and Kuwait.
The war between the two sides continues, and today, Sunday, Iran targeted the American aircraft carrier Abraham Lincoln, while the United States targeted military sites inside Iran.
Trump announces first American casualties in Iran war and predicts fighting will continue for four weeks.
"Our allies are participating in the battle."
US President Donald Trump acknowledged on Sunday that three US service members had been killed in the ongoing clashes with Iran, marking the first casualties during his second term.
In a telephone interview with the Daily Mail, translated by 964 Network , Trump said the slain soldiers were "wonderful people with outstanding records," adding that casualties were "unfortunately expected and could happen again." The identities of the three soldiers have not yet been released.
The president pointed out that previous operations during his second term, including the capture of Venezuelan President Nicolás Maduro in January and the bombing of Iranian nuclear facilities in June, were carried out without American casualties. He added, "We did very well."
Trump predicted that military operations against Iran would last about four weeks, explaining that estimates had indicated from the beginning that the operation would "take about four weeks, maybe less," given the vastness of Iran's territory.
He confirmed that the operations were "proceeding according to plan," noting that the strikes had eliminated "more Iranian leaders than expected," and stating that the number could reach 48 people.
Regarding the political track, Trump expressed his willingness to hold talks with Iran, but said that the timing was uncertain, adding: "They should have been talking last week, not this week."
The president explained that he had been in contact with the leaders of Bahrain, Saudi Arabia, the UAE, Qatar, Jordan and other countries, stressing that some of Washington’s allies “are also involved in the fighting.”
He also indicated that he would deliver a speech to provide an update on the operations, after having announced the first strikes via the Truth Social platform early Saturday morning.
Trump confirmed that his administration had contacted the families of the fallen soldiers and that he would meet with them in due course. He also said he was considering visiting Dover Air Force Base to attend the ceremony for the transfer of their remains.
He concluded by expressing his hope that the military operations would yield "positive results," and expressing his belief that a democratic system could emerge in Iran in the future.
Trump: We destroyed and sank 9 Iranian warships
US President Donald Trump announced on Sunday the destruction and sinking of nine Iranian warships and an attack on their naval command headquarters.
In a post on Truth Social, Trump stated, "We have been informed of the destruction and sinking of nine Iranian warships, some of them large and relatively important," adding that "operations will continue to pursue the remainder."
He further stated that "another attack targeted the Iranian naval command headquarters," noting that it was "largely destroyed, but other than that, their naval forces are performing excellently."
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