The ongoing conflict involving the US and Israel against Iran has intensified existing political rifts in Iraq, a country still recovering from past conflicts. Following the resignation of caretaker Prime Minister Mohammed Shia al-Sudani, factions within Iraq are divided over how to respond to the war, particularly after the killing of Iran's supreme leader, Ali Khamenei. Iran-aligned groups, such as Kataib Hezbollah, have vowed to retaliate against US forces, leading to a surge in drone and missile attacks targeting US bases and interests in Iraq. Concurrently, the Iraqi government is attempting to maintain an 'Iraq first' policy, condemning the violence while navigating pressure from both Iran and the US. This balancing act is complicated by the involvement of pro-Iran factions in the Popular Mobilisation Units (PMU), which are officially part of the Iraqi military but operate independently. As the conflict escalates, the Iraqi economy faces a looming crisis due to potential losses in oil revenue, which constitutes over 90% of the national budget. The situation remains precarious, with Iraqi leaders caught between external pressures and internal divisions, raising concerns about the future stability of the country.