Impact of U.S. Sanctions on Iraq’s Energy Sector
On February 18, 2025, former Iraqi diplomat Ghazi Faisal addressed the severe implications of new U.S. sanctions on Iran, emphasizing the detrimental effects on Iraq’s economy and energy needs.
Faisal noted, “Currently, Iran provides Iraq with 40% of its gas requirements, which is necessary for generating approximately 20,000 megawatts of electricity. However, Iraq’s total electricity production needs to reach 50,000 megawatts, translating to a daily demand of 70 million cubic meters of gas.”
He further explained the challenges faced by Iraq, attributing the energy sector’s struggles to longstanding governmental corruption. Faisal stated, “Due to rampant financial corruption, successive governments seem to have intentionally compromised Iraq’s energy sector, aligning it too closely with Iran, which has suffered decades of economic sanctions tied to its nuclear activities, missile development, and funding of paramilitary groups.”
In addition, he highlighted the dire socio-economic situation in Iran, mentioning, “Iran grapples with 7 million unemployed citizens and over 35 million living below the poverty line, coupled with rampant currency inflation. These factors adversely affect the Iraqi economy, particularly through the illicit dollar market and monopolistic practices within the Iraqi marketplace.”
Faisal warned of impending crises for Iraq as a result of the U.S. sanctions on Iran, stating, “Iraq has yet to discover a viable alternative source of gas. This precarious situation could lead to a severe electricity crisis, particularly during the summer months when demand surges, potentially triggering significant social and political unrest.”
Decades of political instability and financial malpractice have hindered the development of Iraq’s energy sector, leaving the nation unable to achieve self-sufficiency. As U.S. sanctions on Iran tighten, Iraq’s energy crisis is poised to intensify, particularly as summer demands escalate.