Is US pressure on Iraq over reliance on Iranian electricity a blessing in disguise?

Power outages are commonplace in Iraq, which had become highly dependent on Iranian gas and electricity supply. (AFP)
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Updated 27 March 2025
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Is US pressure on Iraq over reliance on Iranian electricity a blessing in disguise?

  • The US has ended a key sanctions waiver, increasing pressure on Iraq to reduce its reliance on Iranian gas and electricity
  • Baghdad is trying to integrate with the GCC power grid to enhance energy security, much to the chagrin of Iran-backed factions

DUBAI/LONDON: Iraq has long had to balance its relationships between competing regional powers, particularly Iran and the Gulf states. Now, with renewed US harrying of Iraq to stop buying gas and electricity from Iran, Baghdad could be drawn further into the Arab orbit.

On March 8, the US State Department said it was not renewing a sanctions waiver that had allowed Iraq to import Iranian electricity. The waiver, initially introduced in 2018 after the US withdrew from the Iran nuclear deal, has been a lifeline for Iraq’s struggling power grid.

Despite its vast oil and gas wealth, years of conflict, corruption, and underinvestment have left Iraq highly dependent on Iranian gas and direct electricity imports to meet its energy needs. Power outages are commonplace, especially in the scorching summer months.




Iraqi laborers work at an oil refinery in the southern town Nassiriya. (AFP/File)

The US decision came as part of President Donald Trump’s “maximum pressure” campaign on Iran, which is “designed to end Iran’s nuclear threat, curtail its ballistic missile program and stop it from supporting terrorist groups,” according to a statement from the US Embassy in Baghdad.

“We urge the Iraqi government to eliminate its dependence on Iranian sources of energy as soon as possible, and welcome the Iraqi prime minister’s commitment to achieve energy independence,” the statement added.

In a call with Prime Minister Mohammed Shia’ Al-Sudani on March 9, US National Security Adviser Mike Waltz encouraged Baghdad to welcome more Western and US energy companies into Iraq’s oil and gas sectors.

According to a readout from that call, Waltz also urged the Iraqi government to work with the semi-autonomous Kurdistan Regional Government of northern Iraq to address remaining contract disputes over energy and to pay arrears owed to US energy companies.




US National Security Adbviser Michael Waltz. (AFP)

Iranian Foreign Minister Abbas Araghchi took to social media on March 10 to criticize the US move, saying it targeted the people of Iraq by attempting to deprive them of access to basic services such as electricity, particularly ahead of the approaching summer months.

With the waiver rescinded, it remains unclear whether Iraq will be permitted to continue importing gas from Iran to feed its power plants. Indeed, some 43 percent of the country’s electricity is generated from Iranian gas.

On March 12, Farhad Alaaeldin, the Iraqi prime minister’s foreign affairs adviser, told a local TV channel that the waiver guaranteed by the US on the import of gas was still in effect — and that only the exemption on imported power has been canceled.

Alaaeldin said the US was, for now at least, merely encouraging Iraq to secure gas from other sources. “The American administration says … diversify your import sources. Go to other countries,” he said.

The US Embassy statement asserted that electricity imports from Iran represent only 4 percent of electricity consumption in Iraq.

But a spokesperson for Iraq’s Ministry of Electricity, Ahmad Moussa, told the Associated Press that should gas imports also be forbidden, it “would cause Iraq to lose more than 30 percent of its electricity energy.”




On March 6, 2025, Iraq's Ministry of Electricity launched Shams Basra, the country's largest solar energy project, in cooperation with Total Energies. (Iraqi News Agency photo)

Although this renewed pressure on Baghdad has officials scrambling to find alternatives, it arguably presents an opportunity for Iraq to pivot toward the Gulf states, integrate into the Arab fold, and thereby reduce its reliance on Tehran.

The question now is whether the Iraqi government will seize the moment to achieve energy independence or remain tethered to Iran’s energy infrastructure.

Achieving true energy independence will not be easy.

In 2022, Iran exported 3.5 terawatt hours of electricity to Iraq through four transmission lines. Iraq also imports up to 50 million cubic meters of gas per day from Iran. The neighbors signed a five-year extension to their gas export agreement in March 2024.

Talks on Iranian gas exports to Iraq began in the second half of 2010, shortly after the US military withdrawal following the 2003 invasion, leading to the signing of a supply agreement for Baghdad in July 2013. A contract for gas exports to Basra was signed in November 2015.

Iraq spends about $4 billion annually on Iranian energy, but US sanctions have delayed the country’s ability to make timely payments, leading to substantial debt accumulation, estimated at $11 billion.

To settle this debt, Iraq proposed an oil-for-gas deal in 2023, allowing it to repay Iran with crude. However it chooses to make these repayments, this significant debt burden poses a further challenge to severing links.

According to Iraq’s Parliamentary Oil, Gas and Natural Resources Committee, securing alternative sources of energy has proven difficult, with past diversification efforts delayed by bureaucracy and political resistance from Iran-backed factions in Baghdad.

Despite the challenges, Iraq has begun taking concrete steps toward integrating with the Gulf Cooperation Council’s energy network. An Oct. 9, 2024, agreement to connect Iraq to the GCC Interconnection Authority marked a significant milestone.




Iraq’s inclusion in the GCC Interconnection Authority would not only reduce its reliance on Iran but enhance regional energy cooperation. (Supplied)

The GCCIA was originally established to link the power grids of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE. Iraq’s inclusion in this grid would not only reduce its reliance on Iranian gas but also enhance regional energy cooperation.

Under the agreement, Iraq will receive 500 megawatts of electricity through transmission lines from Kuwait’s Al-Wafra station to Al-Faw in Basra. A separate deal with Saudi Arabia is expected to add another 1,000 megawatts to Iraq’s power supply.

Given its own significant domestic energy challenges, including infrastructure problems and environmental factors such as droughts that have reduced its hydroelectric output, there is even a case to be made for Iran benefitting from integration into the broader GCCIA grid.

Elsewhere, Iraq has partnered with Saudi Arabia’s ACWA Power, the UAE’s Masdar, and France’s TotalEnergies to develop solar power plants, although these projects are still years away from completion.




Iraq's solar power projects are still years away from completion. ((Shutterstock/file)

Beyond the Gulf grid, Iraq is pursuing additional measures to reduce its dependence on Iranian energy, including an agreement with Turkmenistan in October 2023 to import 20 million cubic meters of gas per day.

Meanwhile, a 115-km transmission line with Turkiye now supplies 300 megawatts of electricity to northern Iraq. Iraq is also building a liquefied natural gas terminal in Al-Faw with a storage capacity of 300,000 cubic meters.

Despite these efforts, Iraq’s transition away from Iranian energy still faces major hurdles.

“The current production of domestic gas cannot replace Iranian imports at this stage, as achieving self-sufficiency requires several years of development and investment,” Iraqi economic analyst Nabil Al-Marsoumi said in a recent social media post.

Even as Iraq moves toward energy diversification, Iran is unlikely to relinquish its grip without resistance.

Tehran exerts significant political influence in Baghdad through Iran-backed militias and Shiite political factions. These groups view stronger GCC ties as a threat to their dominance and have historically opposed efforts to reduce Iraqi dependence on Iranian energy.




Iraq's Prime Minister Mohammed Shia’ Al-Sudani. (AFP)

Prime Minister Al-Sudani initially sought a waiver extension until 2028, arguing that Iraq needed more time to secure alternative energy sources. However, under US pressure, he ultimately relented and announced Iraq’s compliance with sanctions.

His decision sparked criticism from pro-Iranian factions within Iraq, further illustrating the political tightrope he must walk.

Ordinary Iraqis, meanwhile, remain skeptical. Many citizens believe their leaders are beholden to Iran’s interests rather than prioritizing national energy security.

“As long as those in power remain loyal to Iran, they will do whatever it takes to keep us reliant on it,” Modhar, a Baghdad-based driver, told Arab News.

For Gulf states, deepening energy ties with Iraq presents both opportunities and risks. A more integrated Iraq could serve as a bridge between the Arab world and Iran, facilitating broader regional cooperation.

Additionally, stronger economic ties with Baghdad could help Gulf economies diversify their own economies beyond oil exports.

However, Gulf countries must also navigate Iraq’s internal political landscape carefully. Any overt effort to pull Iraq away from Iran risks provoking retaliation from Iran-backed militias, which have launched attacks on US and Gulf interests in the past.




Iraq's new LNG terminal at Al-Faw. (Getty Images)

That said, energy interdependence has the potential to be a stabilizing factor. As regional energy demand grows, a Gulf-wide electricity grid that includes Iraq could provide a reliable supply and reduce dependence on volatile suppliers like Iran.

With the GCC currently producing 272 gigawatts of electricity, a fully integrated power grid could transform Iraq’s economy and cement its position within the Arab fold. How Iraq responds in the coming months will define its future for years to come.

The suspension of the US sanctions waiver has forced Baghdad to confront its reliance on Iranian energy. While the road to energy independence is fraught with challenges, Iraq’s deepening ties with the GCC present a viable alternative.

Whether Iraq can successfully integrate into the GCC’s energy network while balancing its relationship with Iran remains to be seen. However, if Baghdad seizes this historic opportunity, it could finally achieve the energy security and regional influence it has long sought.

As Al-Marsoumi warned: “Key energy projects remain years away from completion.” But the long-term potential of Iraq’s pivot to the GCC is undeniable.

The coming months will determine whether Iraq charts a new course toward the Arab world — or remains in Iran’s shadow.


 


Iraqi foreign minister calls for emergency meeting of Arab counterparts next week

Updated 7 sec ago
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Iraqi foreign minister calls for emergency meeting of Arab counterparts next week

  • Its aim would be to coordinate Arab positions on the escalating military confrontation between Israel and Iran
  • Fuad Hussein suggests it take place during the Organisation of Islamic Cooperation’s Council of Foreign Ministers session that begins in Istanbul on Saturday

LONDON: Iraq’s foreign minister, Fuad Hussein, on Wednesday called for an emergency meeting of his Arab counterparts to discuss the conflict between Israel and Iran, which he said poses destabilizing risks to the wider Middle East.

He suggested it take place on the sidelines of the 51st session of the Organisation of Islamic Cooperation’s Council of Foreign Ministers, which is due to begin in Istanbul on Saturday. The aim of the emergency meeting would be to coordinate Arab positions on the escalation of the military confrontation between Israel and Iran, who have been exchanging attacks since Friday.

Also on Wednesday, Hussein called his Egyptian counterpart, Badr Abdelatty, to discuss the conflict and its repercussions for the security and stability of the region, officials said. Iraq currently chairs the Arab League, which held its most recent summit in Baghdad in May. Egypt hosts the League’s headquarters in Cairo.


Iran-Israel war fears spark fuel shortages in West Bank

Updated 18 June 2025
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Iran-Israel war fears spark fuel shortages in West Bank

  • “Fearing potential supply disruptions or further escalation, citizens across the West Bank have begun stockpiling fuel,” said Abu Al-Rob
  • In the northern West Bank city of Nablus, dozens of drivers waited in line for fuel

RAMALLAH, Palestinian Territories: Fears over the war between Israel and Iran have led to fuel shortages in the occupied West Bank, the Palestinian Authority told AFP Wednesday, as drivers queued in long lines to buy fuel.

“Fearing potential supply disruptions or further escalation, citizens across the West Bank have begun stockpiling fuel, putting additional pressure on an already strained market,” said Mohammad Abu Al-Rob, director of the PA’s communications center.

After decades of enmity and a prolonged shadow war, Israel on Friday launched a massive bombing campaign that prompted Iran to respond with missiles and drones.

The PA official said there has also been “a noticeable decline in the number of fuel tankers arriving from Israel, some of which have been redirected for use by the Israeli occupation army.”

In the northern West Bank city of Nablus, dozens of drivers waited in line for fuel.

Mohammad Ayoub, a resident of Nablus who had been waiting in line for two hours, said he hoped to finally purchase fuel after several failed attempts.

“I came yesterday at about 11:00 p.m. and found the gas stations closed. I also came early in the morning and the situation was the same.”

Ahmad Samaana, a truck driver from Nablus, complained of limits placed on fuel purchases.

“Large trucks, like the one I have, need about 500 liters, but when we enter the station, the worker at the station tells me that he allows filling up with a value of 500 shekels, which is less than 100 liters of diesel,” he told AFP.

“This is not enough for a truck.”

Abu Al-Rob noted that “the (fuel) supply chain remains entirely subject to Israel’s will and control,” as the country controls all entry points into the West Bank, which it has occupied since 1967.

He relayed the Ramallah-based Palestinian Authority’s call “to safeguard the flow of essential supplies — particularly fuel for hospitals, bakeries, and other critical sectors” should the situation worsen.


Israel to resume natural gas exports when military deems it’s safe, energy minister says

Updated 18 June 2025
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Israel to resume natural gas exports when military deems it’s safe, energy minister says

  • Cohen said he has been in contact with Egypt and Jordan about the cut in supplies.
  • “I don’t want to use our strategic storage, so therefore, I needed to cut exports”

TEL AVIV: Israel will resume its natural gas exports when the country’s military believes it would be safe to do so, Israel’s Energy Minister Eli Cohen said on Wednesday, as an air battle between Israel and Iran entered its sixth day.

Two of Israel’s three gas fields — Chevron-operated Leviathan and Energean’s Karish — off its Mediterranean coast that provide the bulk of exports to Egypt and Jordan, have been shut since June 13 amid the conflict between Israel and Iran.

That leaves in operation only the older Tamar field, used mainly for domestic supplies.

Cohen said he has been in contact with Egypt and Jordan about the cut in supplies.

“They can see that we are in a war. I don’t want to use our strategic storage, so therefore, I needed to cut exports,” Cohen told Reuters after a news briefing.

“I hope I will be able to use another rig as soon as possible and use it for the supply of gas (exports). For me, the most important thing is (supplying) Israel,” he said, alluding to fueling needs during the conflict with Iran.

It wasn’t clear when another gas field will be reopened, Cohen said, noting: “We are working with them [the military], the Navy, and right now their recommendation is that one (field) will continue to work and two will be shut down.”

Israeli gas accounts for about 15-20 percent of Egypt’s consumption, data from the Joint Organizations Data Initiative (JODI) shows. The disruption to Israel’s gas supply led Egyptian fertilizer producers to halt operations on Friday.

Israel launched the air war on Iran on Friday after concluding the latter was on the verge of developing a nuclear weapon. Iran maintains its nuclear program is purely for civilian purposes.

OTHER ENERGY SOURCES
Israel’s energy sector, Cohen said, was operating normally, with no shortages expected since the country also maintains reserves in coal, diesel and renewable energy.

Israel’s Oil Refineries in Haifa was hit by an Iranian missile this week, which killed three people and halted operations.

Cohen said he hoped the facility would resume operations within a month, though a second refinery in the south remains open.

Since Friday, the percentage of renewable, or solar, energy used in electricity production has more than doubled to some 40 percent, Cohen said.

There was also some damage to wastewater treatment facilities and pipelines from Iranian air strikes.

Cohen acknowledged that victory against Iran could take weeks but Israel’s energy demands could be met.

“Although the Iranians struck some of our plants, we have very strong energy facilities that can supply all the energy demands for Israeli citizens and the army, in fuel, gas, electricity and water.”


Iranian Ambassador in Tokyo hails Saudi and Arab support

Updated 18 June 2025
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Iranian Ambassador in Tokyo hails Saudi and Arab support

  • Ambassador Seadat recognized the substantial support from Crown Prince Mohammed bin Salman
  • “We will always remember the kindness shown to us by our brothers in Saudi Arabia,” he told Arab News Japan

TOKYO: Iranian Ambassador to Japan, Peiman Seadat, expressed his gratitude for the unified support of Saudi Arabia and other Arab and Muslim countries in their collective effort against the aggression of the Israeli war machine.

He stated that this unity among Arab and Muslim nations is a testament to the strength of regional cooperation.

In an exclusive interview with Arab News Japan on Wednesday, the Ambassador highlighted that Arab and Muslim countries recognize the seriousness of the aggression by the Israeli regime and the threat it poses to the entire region.

Ambassador Seadat recognized the substantial support from Crown Prince Mohammed bin Salman and Foreign Minister Prince Farhan.

“We are deeply grateful for the compassionate assistance provided by the Crown Prince to approximately 80,000 Iranian pilgrims who have been stranded in Saudi Arabia. His Highness personally assured us that these pilgrims are being welcomed as guests of the Kingdom. We will always remember the kindness shown to us by our brothers in Saudi Arabia.”

The Iranian Ambassador, Seadat, also highlighted the support to Iran by Egypt, Qatar, the United Arab Emirates, and Oman, among others. He also expressed gratitude to the Secretary-General of the Gulf Cooperation Council, for his clear condemnation of Israel’s aggressive actions against Iran.


Gaza Humanitarian Foundation initiative ‘outrageous’: UN probe chief

Updated 18 June 2025
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Gaza Humanitarian Foundation initiative ‘outrageous’: UN probe chief

  • GHF began operations on May 26 after Israel completely cut off supplies into Gaza for more than two months, sparking warnings of mass famine
  • UN and major aid groups have refused to cooperate with the foundation over concerns it was designed to cater to Israeli military objectives

GENEVA: The use of the US and Israeli-backed Gaza Humanitarian Foundation to distribute food in the Palestinian territory is “outrageous,” the head of a UN inquiry said Wednesday.
Navi Pillay, who chairs the UN’s Independent International Commission of Inquiry on Israel and the Palestinian territories, joined a growing chorus of criticism of the GHF’s operations, and cited its US links.
“In every war, the siege and starvation surely leads to death,” the former UN rights chief told journalists.
“But this initiative of what’s called a foundation, a private foundation, to supply food, is what I see as outrageous, because it involves the United States itself, the government, and it turns out, as we watch daily, that people who go to those centers are being killed as they seek food.”
An officially private effort with opaque funding, GHF began operations on May 26 after Israel completely cut off supplies into Gaza for more than two months, sparking warnings of mass famine.
The United Nations and major aid groups have refused to cooperate with the foundation over concerns it was designed to cater to Israeli military objectives.
Dozens of Palestinians have been killed while trying to reach GHF distribution points.
Pillay said the commission would “have to look into... the policy purpose and how it’s being effected.
“We have to spell out what is the motive of, right now, the killing of people who are coming for humanitarian aid from this so-called foundation — and that lives are being lost just in trying to secure food for their children.”
Unprecedented in its open-ended scope, the three-person Commission of Inquiry was established by the UN Human Rights Council in May 2021 to investigate alleged violations of international humanitarian and human rights law in Israel and the Palestinian territories.
South African former High Court judge Pillay, 83, served as a judge on the International Criminal Court and presided over the International Criminal Tribunal for Rwanda.
On Tuesday she presented the commission’s latest report to the Human Rights Council.
It said Israel had attacked Gaza’s schools, religious and cultural sites as part of a “widespread and systematic” assault on the civilian population, in which Israeli forces have committed “war crimes” and “the crime against humanity of extermination.”
Israel does not cooperate with the investigation and has long accused it of “systematic anti-Israel discrimination.”