How decades of instability, dependence on Iranian gas hollowed out Iraq’s power sector

LONDON: As summer temperatures inch above 45 C and the hum of backup generators fills the air in the capital Baghdad and other cities, Iraq finds itself sliding toward its worst electricity crisis in years.

Decades of mismanagement had already left the country’s power sector vulnerable. Now, the US-Israeli war with Iran has turned that chronic weakness into an emergency.

In late May, Iraq’s central government began buying electricity from Turkiye and its own semiautonomous Kurdistan region to help shore up supplies in several provinces.

The purchases are part of a new energy strategy by the new government of Prime Minister Ali Al-Zaidi to reduce the length and frequency of blackouts.

The move followed a May 23 directive from Electricity Minister Ali Saadi Wahib to establish a central emergency operations room to handle the challenges of summer 2026.

Even so, experts say the immediate crunch reflects a much deeper problem. Years of war, damaged infrastructure, systemic corruption and foreign influence have left Iraq’s energy sector heavily dependent on gas imports from Iran.

“Iraq’s electricity system is failing at more than one layer... “A wartime shock exposes these weaknesses; it does not explain them.”

Ahmed Gailani, Iraqi energy expert

“War-torn countries, especially those emerging from conflict, insurgency, and decades of authoritarian rule, are often vulnerable to fragile power structures, foreign influence, and corruption,” Arman Mahmoudian, a research fellow at the University of South Florida’s Global and National Security Institute, told Arab News.

“Iraq is no exception. Even before Saddam Hussein’s Baathist regime, Iraq had a long history of authoritarian governance.

“Authoritarianism often embeds corruption within the political establishment while also preventing the growth of strong institutions. Yet only solid institutions can effectively counter corruption and strengthen a fragile political system.

“These factors have certainly contributed to Iraq’s vulnerability, its dependence on Tehran, and the persistence of corruption.”

Iraq scored 28 out of 100 in Transparency International’s 2025 Corruption Perceptions Index, even though some officials and international observers say Iraq has taken steps in recent years to strengthen oversight.

And while corruption is a significant part of the story, Iraq’s electricity crisis reflects a deeper structural dependence on imported Iranian gas.

Despite vast oil reserves, the country has long relied on natural gas imports from Iran to keep its grid running. During periods of high consumption, imported gas supports up to 40 percent of Iraq’s power generation capacity, according to Iraq Business Review.

That lifeline is now fraying. Iranian gas supplies have plunged after Israeli strikes damaged key energy facilities, pushing Iraq’s grid closer to collapse just as summer demand peaks.

Iran has reportedly lost about a third of its natural gas production capacity after strikes damaged facilities at Asaluyeh, the onshore processing hub for South Pars, the country’s largest natural gas field.

Israel first struck South Pars in mid March. Iran halted gas flows to Iraq on March 18 and retaliated by attacking energy infrastructure across the region, Reuters reported.

Israel struck again in early April, targeting the South Pars Petrochemical complex, Iran’s largest petrochemical facility.

The Iraqi Electricity Ministry warned of immediate nationwide disruption to power generation. Spokesperson Ahmed Moussa said the suspension had already forced about 3.1 GW offline after gas flows fell from 19 million cubic meters to zero.

That amount of electricity could power roughly 2 to 3 million homes, based on typical consumption estimates from the International Energy Agency.

After weeks of relative calm, violence resumed on June 7, with Iran launching missiles at  northern Israel and Iranian energy plants again being struck by Israel.

Before the strikes, Iran supplied Iraq with 50 million cubic meters a day, according to Enterdata, an independent research company specializing in energy and climate analysis.

The Electricity Ministry ordered closer coordination with the Oil Ministry to offset the shortfall through alternative fuels and domestic gas supplies.

By late May, Iran said it had restored gas production at three offshore platforms in the South Pars field, according to state media reports carried by IRNA. But flow to Iraq was not resumed.

Analysts insist the latest shock should not obscure deeper causes.

Ahmed Gailani, an Iraqi energy expert, said Iraq’s electricity crisis “is not mainly a wartime crisis,” though “the war has worsened the situation by putting pressure on fuel supply, especially Iraqi associated gas produced with oil.

“Iraq’s electricity system is failing at more than one layer: fuel supply, generation availability, network delivery, operation, metering, billing, collection, governance and reinvestment,” Gailani told Arab News. “A wartime shock exposes these weaknesses; it does not explain them.”

Iraq, he added, became dependent on Iranian gas because “electricity planning moved faster than domestic gas planning.”

Successive governments, he said, invested in gas-fired power plants — which are “generally more efficient, cleaner and less maintenance-intensive than running on diesel or heavy fuel oil” — but “did not capture enough of its associated gas, did not develop enough free gas fields such as Akkas, and did not diversify gas supply quickly enough.”

He added: “Iranian gas became the easiest bridge fuel, and over time that bridge became a dependency.”

According to a report by the energy news website Attaqa, Iraq produced about 29 GW of electricity in early 2026, while normal demand already stood near 40 GW. In the summer, demand could rise to 55 GW or more.

Some official projections put peak demand at 60 GW. In April, the Electricity Ministry said it planned to produce 30 GW, provided enough gas was available, former ministry spokesman Ahmed Moussa told state media.

That shortfall means many provinces are likely to face scheduled outages, with poorer areas expected to suffer most.

Iraq’s dependence on Iran also reflects the country’s broader post-2003 instability, according to Mahmoudian of the University of South Florida. 

“It is important to remember that since the US invasion in 2003, Iraq has made some economic progress, but it has lacked sustained military, political, and security stability,” he said.

“At the same time, Iraq also experienced intense competition among different political blocs, including Muqtada Al-Sadr’s movement, the Dawa Party, and the Supreme Council for the Islamic Revolution in Iraq.

“Alongside these, Baghdad had constant conflict with the Kurdish regional government over various issues, including governance over Kirkuk and budget distribution.”

Iraq’s modern history helps explain why long-term infrastructure planning repeatedly stalled.

Sunni groups, and later Al-Qaeda in Iraq, mounted an insurgency against US-led coalition forces and the new Iraqi state in the mid-2000s, while various Iran-backed militias also expanded their influence and engaged in violence.

In 2014, three years after civil war began in neighboring Syria, Daesh extremists seized roughly a third of Iraqi territory, including Mosul and large parts of Nineveh, Salah Al-Din and Anbar.

The group’s offensive triggered years of conflict and destruction before it was territorially defeated in Iraq in 2017 and in Syria in 2019.

Intense political rivalries have repeatedly produced fragile coalitions, government paralysis and short-lived cabinets.

“All of these security and political challenges prevented Iraq from having a stable opportunity to build a coherent, fully functional national infrastructure,” Mahmoudian said.

“Power infrastructure is highly complex, in terms of planning, construction, investment, and long-term maintenance. It requires years of consistent work, serious investment, and, above all, stability. Iraq has had very little of that since 2003.”

Mahmoudian said Iraq’s dependence on Iran is “not only a matter of Iraq’s internal security problems,” but “also a question of Iran’s influence inside Iraq.”

Iran’s influence inside Iraq compounded the problem. After 2003, Iran-backed groups returned to Iraq and became major political actors, with some entering Iraq’s security apparatus, military and intelligence services.

“Their presence across the Iraqi administration and state machinery helped expand the influence of Iran-backed groups inside the Iraqi system,” Mahmoudian said, giving Iran “greater opportunities to secure contracts, extract economic and financial concessions, and build the kind of economic and financial footprint it has in Iraq today.”

The electricity crisis is also unfolding just as Iraq faces shrinking oil revenues.

Although Iraq is OPEC’s second-largest oil producer and holds the world’s fifth-largest oil reserves, the war has devastated Iraq’s export capacity.

Energy expert Govand Sherwani recently told Kurdish broadcaster Shams TV that Iraq’s only current export outlet was Turkiye’s Ceyhan port via Iraqi Kurdistan, with a capacity of 250,000 barrels per day, which is only about 7 percent of previous export capacity.

With the Strait of Hormuz, a crucial global oil shipping route, effectively closed by Iran, and the US maintaining a blockade on Iranian ports, Iraq’s oil production reportedly fell by about 60 percent from prewar levels.

In March, Iraq pumped about 1.7 million to 1.8 million barrels per day, down from about 4.3 million before the conflict, Bloomberg reported.

And with more than 90 percent of Iraq’s oil exports traditionally moving through Hormuz, Iraq’s oil exports fell to 18.6 million barrels in March, down from 99.87 million in February, a drop of 81.3 percent, according to official figures.

In May, seaborne crude exports fell by more than 97 percent, dropping to just 96,000 barrels per day from 3.32 million barrels per day in the same month last year, the website Oil Price reported.

“With oil revenues declining amid regional tensions, and exports from Basra ports — which previously accounted for 94 percent of production — having fallen, financing any reform plans has become much more difficult,” Sherwani said.

But a former Iraqi official argues that fuel shortages alone do not explain Iraq’s power failures.

Ihsan Abdul Jabbar, former oil minister, said in televised remarks quoted by Attaqa that electricity outages in recent years were not directly tied to fuel shortages, but rather to operational and administrative problems and delayed maintenance.

He said most of Iraq’s power plants were designed to run on a dual-fuel system, allowing them to use natural gas, fuel oil and other petroleum liquids. Frequent claims linking power cuts solely to shortages of Iranian gas, he said, are “sometimes used to justify failures.”

He stressed that Iraq “has operational capabilities that allow most plants to keep running even when imported gas supplies declined during past critical periods.”

For Gailani, the answer is to focus first on reforms that are politically feasible and technically effective.

“To address reform, Iraq should start with actions that deliver the largest benefit to the electricity system at the lowest political and economic cost,” he said.

“That means reform should begin with metering the system properly, reducing technical and administrative losses, improving service where people are expected to pay, and linking electricity planning to serious gas capture and fuel planning,” he added.

“Iraqis are already paying very high prices to private generators. The challenge is to move that spending into a public system that can deliver reliable electricity at lower social, economic and environmental cost.”

As Baghdad scrambles for emergency fixes, the generators humming across Baghdad remain a symptom of a deeper problem.

Until Iraq addresses the institutional failures, foreign dependencies and chronic underinvestment that have plagued its energy sector for decades, every summer will bring an emergency.