The electricity outages in Iraq have become one of the most significant crises in the country. After two decades and massive spending, the problem of electricity interruptions continues to cause great suffering for citizens. The root of the electricity crisis in Iraq lies in the shortage of gas supplies for electricity generation plants. Currently, 80% of the electricity produced in Iraqi power stations depends on gas, and Iraq requires between 55 to 60 million cubic meters of gas daily. As summer approaches and some provinces face temperatures reaching 40 degrees Celsius, the country’s need for gas imports to secure fuel for power plants has become more pressing.
The government signed its first contract to import gas from Iran in 2011 to address the electricity production issue, agreeing on an annual quantity of 20 billion cubic meters, extended for five years in 2017 and 2023. Despite increased needs in recent years, the amount of gas imported from Iran has not reached the agreed quantity. For instance, in 2022 and 2023, Iraq imported 9.4 and 7.3 billion cubic meters of gas from Iran, which is less than 50% of the agreed amount.
This raises the question: Why, despite the Iraqi need to import gas, has Iraq imported a much smaller amount than the contract specifies? Is Iran facing a shortage of gas reserves or production, or is there another reason?
Statistics indicate that Iran holds the second-largest gas reserves in the world, following Russia. According to the annual report by British Petroleum, Iran ranked third as the largest producer of natural gas in the world after the U.S. and Russia, with a production of 259 billion cubic meters in 2022. Under these circumstances, the gas import contract between Iran and Iraq to secure 20 billion cubic meters annually represents only 8% of Iran's gas production; thus, Tehran can easily meet Iraq's needs.
So what is the problem? Why is the gas exported from Iran to Iraq repeatedly interrupted?
Studies suggest that due to U.S. dominance over the Iraqi financial and banking network, the government is unable to pay for the gas and electricity received from Iran, and the funds resulting from Iranian gas exports are frozen in the Trade Bank of Iraq (TBI). In this context, Mohammed Shia' al-Sudani, the former Iraqi Prime Minister, stated in an interview with Iraqi Network on July 12, 2023, "Iran supplies us with gas without receiving payment. There are 11 billion euros of gas money we have paid them frozen in the Trade Bank of Iraq (TBI), and they cannot access those funds due to the sanctions."
This has led to Iran losing the incentive to export its gas to Iraq; holding large petrochemical and steel industries, Iran can convert the produced gas into various products within the country, generating substantial foreign currency revenues through the export of these products.
But what is the practical and immediate solution to the electricity outage problem in Iraq?
The initiation of the U.S. and Zionist entity attack on Iran on February 28, 2026, and Iran's assertion of sovereignty over the Strait of Hormuz to maintain its security have resulted in decreased oil and gas exports and production for the Gulf countries, including Iraq. With daily production of about four million four hundred thousand barrels of oil and exporting three million six hundred thousand barrels, Iraq ranks as the sixth-largest producer and fifth-largest exporter of oil in the world.
Currently, with the closure of the Strait of Hormuz, Iraq faces real obstacles regarding the sale of its oil. The Iraqi government could address the issue of selling its oil and importing gas from Iran to solve the electricity crisis by settling debts and selling oil to Iran in exchange for gas. With Iran possessing giant refineries with a refining capacity of about 2.237 million barrels per day, it ranked second in oil processing among OPEC member countries in 2025, holding a share equivalent to 16% of the refining capacity of the organization and 2.1% of global refining capacity, and through this managed to achieve foreign currency revenues of 5.5 billion dollars. As a result, Iran could refine and export Iraqi oil. Given its good relations with Iranian officials, the government has the responsibility to initiate serious negotiations with Tehran and take measures to address the electricity crisis in Iraq.