Energy and fiscal challenges impact Yemen and Iraq

The Yemeni Ministry of Oil and Minerals has identified several causes for the recent domestic gas shortages in Aden and other provinces. The ministry reported that tribal disputes affected gas tankers between January and August 2026, causing 126 days of supply disruptions. Additionally, increased consumption due to the conversion of vehicles to gas and emergency maintenance at the Safer production plants contributed to the crisis.

To address the shortage, the ministry is restructuring distribution based on population density, prioritizing household needs, and coordinating with security forces to protect transport routes. Technical committees will begin assessing regional needs next week.

In Iraq, the Ministry of Finance reported a significant fiscal gap for the first half of 2026, with a deficit of approximately 18.7 trillion dinars ($14.27 billion). While oil revenues reached 28.4 trillion dinars, total expenditures exceeded 54.6 trillion dinars, driven largely by high current spending on salaries, social welfare, and debt servicing.

Financial advisors noted that regional developments and disruptions to oil exports have impacted liquidity. The government faces challenges in funding essential obligations, such as pensions and salaries, without increasing borrowing or implementing stricter liquidity management.