Iraq power 2026: war on Iran collapses the grid's last defenses ahead of peak summer

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.