Iraqi Dinar And Oil Industry

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As per the geological surveys and new exploration in Iraq it has been found that Iraq contain the world’s largest oil reserves. That’s why many foreign oil drilling companies are also showing a great level of interest in Iraq. As the war in Iraq is over the American troops are departing and there is peace in the area now. That’s why many investors and oil drilling companies are focusing on the Iraq.

Iraq has the most significant effect on the price of oil on the international market, in the past we had noticed that, due to war in Iraq the price of oil was increased because of low supply and more demand. Now the war is over and Iraq is building the infrastructure it shows economic growth in the country in the upcoming days. Due to which many investors believe that Iraqi Dinar will move upward in the Foreign Exchange Market.

Iraq is aware of the situation and due to increase in the demand of oil they are planning to increase their productivity because they know that this supply and demand situation of Oil will definitely increase the Iraqi dinar worth. But the problem they are facing right now is that don’t have an infrastructure to increase the productivity.

Iraq doesn’t have the latest technology which can help him to explore new oil reserves and extract some of the reserves available that’s why a suggestion has been given to privatize the oil industry. If that happens we will see the great number of companies investing in Iraq to tap few of the untouched resources, which will ultimately increase the employment in the country and will help the country to grow. It will ultimately increase the value of the Purchase Iraqi Dinar with respect to the USD.

Iraq is also aiming on the oil refinery sector. The oil usually extracted after drilling is the crude oil and it contains lots of impurity and heavy compounds. A refinery helps in purifying the crude oil and convert it in the usable form. There is a great need of new refineries so that Iraq can export a more purified form of oil as well as right now Iraq’s major export consist of crude oil. A couple of new refineries had been set. But Iraq is planning to set up 4 more refineries which are technologically updated so that the output can be increased and the Gross domestic production will increase (GDP). It will also affect the Iraqi dinar in a positive way.

Iraq is also focusing on their oil trade. Lots of foreign investment is being received to help Iraq’s oil trade. Iraq is planning to increase its oil export. As the oil trade is the major source of foreign income in Iraq so this increase in the oil trade will also provide a great help to Iraqi dinar to elevate its status in the foreign market.

Iraqi Dinar is positively correlated with the demand for oil in the foreign market so as the demand for oil will increase so does the value of the Iraqi dinar.