Shafaq News

Iraq is facing its most severe electricity crisis in years
as summer approaches, a convergence of war, sanctions, fiscal collapse, and
decades of structural failure that has simultaneously stripped Baghdad of its
primary fuel source, drained the revenues needed to replace it, and left
contingency projects unfinished as temperatures begin to climb toward 50
degrees Celsius.

The scale of the shortfall is staggering even by Iraq’s
standards. The country is expected to face peak demand of roughly 40 gigawatts
this summer, compared with current production of approximately 29 gigawatts, according
to data from the Washington-based Attaqa energy platform. In previous years,
that gap was partly bridged by Iranian gas and electricity imports, but this
has largely collapsed because two decades of deferred investment and governance
failure left Iraq with no buffers when it did.

What makes the 2026 crisis structurally different from those
that preceded it —in a country that has lived with chronic undersupply for two
decades— is the simultaneous collapse of the mechanisms Baghdad relied on to
manage it. Iranian gas flows, which underpinned nearly a third of Iraq’s
electricity generation, have been severely disrupted by the war. And the oil
revenues that would ordinarily finance alternative energy arrangements remain
under sustained American pressure: Washington retains significant leverage over
Iraqi oil revenues, and has repeatedly threatened to restrict access unless
Baghdad moves decisively to curtail the Iran-aligned armed factions that are
deeply embedded in Iraqi political life. That leverage has not disappeared with
the war, as Iraq finds itself simultaneously losing its primary fuel source and
unable to fully mobilize the fiscal resources needed to replace it.

Read more: In darkening Baghdad, oil lamps return as power fears grow

A Supply Line Built On A Fault Line

For years, Iraq has depended on Iranian natural gas to fuel
the thermal power stations that generate the majority of its electricity. At
peak supply, Iran was delivering around 30 million cubic meters of gas per day,
enough to support nearly a third of Iraq’s power generation capacity.

The arrangement required the United States to issue periodic
sanctions waivers exempting Baghdad from penalties for purchasing Iranian
energy, and Washington used those waivers as leverage, repeatedly urging Iraq
to reduce its dependency while renewing the exemptions under political
pressure.

The Trump administration ended that ambiguity when the US
sanctions waiver expired on March 8, 2025, cutting Iraq off from Iranian
electricity imports and placing its gas purchases under increasing pressure.
Iranian gas flows dropped by roughly 40 percent between April and August 2025
as sanctions enforcement tightened. Baghdad scrambled to negotiate
alternatives, a Turkmenistan gas swap, floating LNG terminals in the south,
accelerated interconnections with Turkey, Jordan, and the Gulf Cooperation
Council, but each initiative moved more slowly than the crisis demanded.

Then, following strikes by the US and Israeli forces on Iran
on February 28, 2026, the crisis entered a new phase. Reported strikes on
infrastructure connected to Iran’s South Pars gas field —the world’s largest—
caused an abrupt halt in gas flows to Iraq, knocking more than 3,000 megawatts
off the national grid almost overnight. Partial flows later resumed, but the
current supply has since fallen again.

Ahmed Moussa, spokesperson for Iraq’s Ministry of
Electricity, told Shafaq News that gas imports now stand at roughly 5 million
cubic meters per day, barely one-sixth of the 30 million cubic meters Iraq
requires.

Read more: The end of a waiver: Iraq’s struggle for energy independence

The Fiscal Floor Disappears

The war has a dual effect: it damages Iraq’s fuel supply and
destroys the financial capacity to replace it. Since the Strait of Hormuz
closure on February 28, Iraq’s oil export revenues have dropped by nearly 90
percent, according to the Attaqa platform’s reporting. For a country where oil
accounts for roughly 90 percent of state income, this collapse is a paralysis.

The Ministry of Electricity acknowledged in April that a
contract with Excelerate Energy to install a floating LNG processing platform
—one of Baghdad’s primary hedge mechanisms— faces delays that could push its
commissioning past the June target, directly into peak summer demand.

The cruelest dimension of Iraq’s electricity crisis is what
the country does with its own gas. Iraq holds the world’s third-highest rate of
gas flaring, burning off at the wellhead the associated gas extracted alongside
oil, rather than capturing it for power generation. Iraq flared approximately
18 billion cubic meters of gas in 2023 alone, according to World Bank data,
enough to generate roughly 33 gigawatts of electricity, exceeding the country’s
entire current production capacity. Iraq is, in other words, burning the
solution to its own crisis.

Is This Summer Different?

Spokesperson Ahmed Moussa revealed that the ministry is
executing its summer readiness plan through maintenance, grid expansion, and
transmission upgrades, and that 254 megawatts from the Basra solar project and
50 megawatts from Karbala are already operational, with further phases underway
across several provinces.

Interconnection projects with Turkiye, Jordan, and the Gulf
states are advancing, he added, though their financing remains contingent on
budget approval.

“The ministry’s plan is in its final stages,” he said,
pointing out that gas shortage remains the single most consequential factor
affecting supply hours during peak season.

Despite the government’s initiatives, economic expert
Mohamed al-Hasani warned that Iraq is heading toward a genuine energy crisis
this summer, driven by seasonal demand and the compounding effect of falling
associated gas output, incomplete import infrastructure, and the volatility of
Iranian supply. “The country faces a clear gap in supplies. There are no
ready alternatives capable of filling the current fuel shortage,” he told
Shafaq News.

Read more: Beyond Iran: Iraq’s multi-pronged approach to electricity imports

Economic analyst Hilal al-Ta’an described the problem in
broader terms, telling Shafaq News it is “a comprehensive gap between
fuel, infrastructure, and demand management —a systems failure in which any
disruption to imported gas translates directly into blackout hours for ordinary
citizens.” Real solutions, he cautioned, require years of sustained
government investment, not seasonal fixes.

For ordinary Iraqis, the crisis translates into long
blackout hours during extreme heat. By last summer, before the war had begun,
central provinces including Najaf, Karbala, al-Diwaniyah, Babil, and Muthanna
were already enduring daily blackouts of up to 12 hours, triggering protests
across multiple cities. Demonstrators blocked roads, burned tires, and
confronted security forces. Private diesel generators fill the gap for those
who can afford them. For low-income households —the majority in most of Iraq’s
southern and central provinces— they cannot.

Iraq’s electricity crises have historically been treated as
seasonal emergencies, something to endure through summer and manage until the
next one. The 2026 crisis resists that framing. The war on Iran has only
collapsed the three mechanisms Baghdad used to contain it: Iranian imports, oil
revenues, and the political breathing room that US sanctions waivers provided,
all simultaneously, as temperatures rise and demand climbs toward levels the
national grid cannot come close to meeting.

Written and edited by Shafaq News staff.