Kurdistan trade falls 70% after 1,000+ strikes

Iraq’s semi-autonomous Kurdistan region has suffered heavy economic disruption and infrastructure damage after five months of regional hostilities tied to the United States-Iran conflict, according to the Kurdistan Regional Government (KRG). The KRG said the security deterioration has hit trade, public services, and investment conditions across the region.

The KRG reported that, since February 2026, the region has been targeted by more than 1,000 missile and drone strikes. Officials said the attacks originated both from Iranian territory and from domestic militias operating outside of Iraqi state control.

KRG cites trade shock and rising financial losses

The KRG said the escalation has triggered a 70 percent decline in regional trade. It also put conflict-related losses at 1.5 trillion Iraqi dinars, about $1.14 billion, by April.

Officials said the strikes have hit energy facilities, military sites, and civilian areas. The pattern of targeting has increased repair costs and raised operational risks for businesses and essential infrastructure, the KRG said.

Energy facilities and civilian areas among targets

The security situation is adding pressure to Kurdistan’s existing financial instability, officials said. The KRG also remains in dispute with Iraq’s federal government in Baghdad over revenue sharing, a longstanding issue that has become harder to manage amid the current disruption.

Security experts said both the KRG and federal authorities lack comprehensive air defense systems needed to reduce the ongoing threat from non-state armed groups. They pointed to activity from groups operating from the Nineveh Plains and the vicinity of Kirkuk as part of the continuing risk landscape.

Iraq’s oil sector faces force majeure amid export disruption The conflict’s effects are also weighing on the broader Iraqi economy, according to officials. Iraq’s Ministry of Oil has declared force majeure on foreign-developed oilfields, a move that signals severe operational constraints.

Officials linked the step to the disruption of crude exports through the Strait of Hormuz, which they said has effectively halted the country’s primary revenue stream. With oil revenues central to Iraq’s public finances, the declaration underscores the extent of the shock to state income during the current security crisis.

Air defense gaps add to uncertainty

Officials and experts said the persistence of missile and drone threats leaves key questions unresolved, including how quickly damaged facilities can be restored and whether trade routes and commercial activity can stabilize while attacks continue. For businesses and households, the uncertainty is compounded by the dual pressure of physical security risks and strained government finances at both regional and federal levels.