Iraq scrambles for alternatives as US cuts Iran energy waivers

Shafaq News/ The United States' decision not to renew waivers includes only electricity imports from Iran, not all gas imports, FGE revealed.

Iraq relies on Iran for 22% of its total gas and electricity imports according to FGE, raising concerns over whether Iraq can sustain its power grid without alternative supplies.

FGE’s Middle East managing director, Iman Nasseri, noted, "While gas imports are technically exempt, US authorities could sanction Iraq’s payment mechanisms if they violate sanctions." Experts warn that the decision could disrupt supply chains as Iraq’s dependence on Iranian gas "remains critical."

The country’s electricity grid could lose over 30% of its capacity if gas imports are affected, Iraqi Electricity Ministry spokesperson Ahmed Moussa told the Associated Press. "Energy shortages could trigger fresh protests, particularly in Basra, where previous blackouts have fueled unrest."

According to an FGE analysis, the shortage could be partially mitigated by transitioning from gas to liquid fuels. Iraq has asked the Oil Ministry to increase fuel oil supplies to 100,000 barrels per day, up from 35,000 barrels per day, according to Platts.

The government is also expanding grid connections with Saudi Arabia and accelerating investment in associated gas to reduce reliance on Iranian imports.

The decision not to renew the waivers is part of US President Donald Trump’s “maximum pressure” campaign against Iran. US National Security Advisor Mike Waltz said the pressure on Iran would increase if Iran "continued to develop a nuclear weapons capability and support terrorism across the region, including in Iraq."

Waltz also urged Iraq to expand partnerships with US energy firms and work with the Kurdistan Regional Government (KRG) to reopen the Iraq-Turkiye pipeline, which has remained closed for two years due to disputes between Baghdad and Erbil.

Despite US diplomatic pressure, two rounds of talks between Baghdad and Erbil have failed to resolve disputes over payment mechanisms and oil contracts. A source from one of the oil companies involved in the talks, speaking anonymously, told Shafaq News that "while tensions persist, there remains a possibility of compromise."