Iraq’s New Prime Minister Pivots to U.S. Energy Giants in Sweeping Policy Shift
Baghdad offers priority access to American firms as regional debt markets stage a recovery following geopolitical easing.
Iraq’s newly appointed Prime Minister, Ali Al Zaidi, has initiated a significant realignment of the country’s economic and foreign policy, granting U.S. corporations “top priority” for major infrastructure and energy contracts. The directive, which affects the ministries of oil, electricity, and communications, signals a strategic effort to deepen ties with Washington ahead of Al Zaidi’s scheduled visit to the U.S. capital in mid-July.
Under the new administration, Baghdad has already greenlit major oil projects involving American energy heavyweights Chevron, Halliburton, and HKN. Parallel to these deals, the government is negotiating with Starlink to modernize the nation’s telecommunications sector. A cornerstone of this partnership is a proposed joint energy and development fund, which would be capitalized by the proceeds of 500,000 barrels per day (bpd) of Iraqi crude. This supply is intended to help replenish the U.S. Strategic Petroleum Reserve, which recently hit its lowest levels in four decades.
Al Zaidi’s aggressive production targets could see output rise to two million bpd, potentially challenging Iraq’s standing within OPEC. While the Oil Ministry has officially denied rumors of an imminent exit from the organization, the Prime Minister suggested that membership could be suspended if demands for a higher production quota are ignored.
Accompanying this economic pivot is a domestic anti-corruption drive that has already resulted in the arrest of 47 high-ranking officials, including members of parliament and oil industry executives. This crackdown comes as Iraq faces heightened international scrutiny after being placed on the Financial Action Task Force’s “grey list.” The country currently ranks 136th on Transparency International’s Corruption Perceptions Index, a standing the new administration aims to improve to attract further foreign direct investment.
Gulf Debt Markets Rebound Post-Ceasefire
The broader Middle East financial landscape is also showing signs of recovery. Following a ceasefire on April 8 that ended a period of intense regional friction, Gulf debt markets have staged a “relief rally.” In a single week in late June, regional entities including QatarEnergy, Emirates NBD, and First Abu Dhabi Bank (FAB) issued a combined $7.5 billion in debt.
A standout transaction was the $500 million debut sukuk—or Islamic bond—from UAE-based Burjeel Holdings. The issuance was more than three times oversubscribed, with substantial interest from international institutional investors in the U.K. and the U.S. This surge in activity marks a sharp reversal from February, when primary bond issuances halted abruptly due to escalating geopolitical risk premiums.
Yield spreads between Gulf investment-grade debt and U.S. Treasuries have since narrowed to pre-conflict levels. This stability is largely attributed to the robust sovereign reserves held by most GCC states. However, analysts at Fitch Ratings remain cautious, noting that speculative-grade debt spreads remain elevated and the region’s market remains sensitive to sudden shifts in political stability.
Expansion in UAE Gaming and Saudi Asset Management
The UAE’s entertainment sector is also seeing new international entrants. U.S.-based Fanatics has formed a joint venture with Momentum Group to enter the Emirati gaming market. This move allows Fanatics to tap into the UAE’s lottery, iGaming, and sportsbook sectors. The UAE gaming market has seen explosive growth, rising from $484 million in 2023 to $1.16 billion in 2024, supported by high smartphone penetration and a tech-savvy population.
In neighboring Saudi Arabia, State Street has secured a fund administration license, expanding its 25-year presence in the Kingdom. The bank, which manages approximately $127 billion in assets under custody in the country, is a key partner for the Public Investment Fund (PIF). This expansion aligns with Riyadh’s Vision 2030 goals to deepen local capital markets and enhance asset servicing capabilities.
Global Economic Shifts: EVs and AI Capex
The recent volatility in oil prices has had the unintended consequence of accelerating the global transition to electric vehicles (EVs). Data from Goldman Sachs indicates that EV market share reached an all-time high of 26.1% in May, as consumers sought alternatives to high fuel costs. This shift represents a faster rate of adoption in four months than several years of government climate policy had previously achieved.
Meanwhile, the global tech sector is bracing for a massive capital expenditure cycle. The world’s five largest hyperscalers are projected to spend over $1 trillion on AI-related infrastructure through 2026. The Bank for International Settlements has warned that the financial system is increasingly exposed to this trend, with AI-related firms now accounting for nearly half of all investment-grade bond issuances.
In the banking sector, JP Morgan Chase is moving closer to a leadership transition. The bank has narrowed its CEO succession search to two internal candidates, Doug Petno and Troy Rohrbaugh, who were recently promoted to co-presidents to oversee broader operational portfolios.
