The electricity outage in Iraq has turned into one of the most significant crises in the country, and after two decades and massive spending, the electricity cut continues to cause great suffering for citizens. The root of the electricity crisis in Iraq stems from the lack of gas supplies for power plants. Currently, 80% of the electricity produced in Iraqi power plants relies on gas, and Iraq requires between 55 to 60 million cubic meters of gas daily. As we approach the summer season, some provinces are facing temperatures of 40 degrees Celsius, and the need for the country to import gas to secure fuel for power generation has become more urgent.
The government signed its first contract to import gas from Iran in 2011 in order to solve the electricity production issue, with an annual quantity of 20 billion cubic meters, which was extended for five years in 2017 and 2023. Despite the increasing needs of Iraq in recent years, the quantity of gas imported from Iran in the past years has not reached the agreed-upon amount. For example, 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-upon quantity.
This raises the question of why, despite Iraq's need to import gas, has Iraq imported much less than the contracted amount? Is Iran facing a shortage of gas reserves or production, or is there another reason?
Statistics indicate that Iran has the second largest gas reserves in the world, after Russia. According to the annual report of British Petroleum, Iran ranked third as the largest producer of natural gas in the world after the USA and Russia in 2022, with a production of 259 billion cubic meters. Under these circumstances, the gas import contract between Iran and Iraq, aimed at securing 20 billion cubic meters annually, represents only 8% of Iran's gas production; therefore, Tehran can easily provide what Iraq needs.
So what is the issue? Why is the gas exported from Iran to Iraq frequently interrupted?
Studies indicate that due to the United States' dominance over the Iraqi financial and banking network, the government is not allowed to pay for the gas and electricity received from Iran, and the funds resulting from Iranian gas exports are frozen in the Iraqi Trade Bank (TBI). In this context, Muhammad Shia al-Sudani, the former Iraqi Prime Minister, said in an interview with Iraqi Network on July 12, 2023, "Iran supplies us with gas without receiving payment. There are 11 billion euros of our gas payments frozen in the Iraqi Trade Bank (TBI), and they cannot access that money due to sanctions."
This situation has led Iran to lose the incentive to export its gas to Iraq; Iran, under its vast petrochemical and steel industries, can transform the produced gas into various products domestically and earn significant foreign currency returns by exporting these products.
But what is the practical and immediate solution to the electricity crisis in Iraq?
The start of the American and Zionist attack on Iran on February 28, 2026, and Iran's assertion of its sovereignty over the Strait of Hormuz to maintain its security has resulted in Gulf countries, including Iraq, facing a decline in oil and gas exports and production. Iraq, with a daily production of about four million and four hundred thousand barrels of oil and the export of three million and six hundred thousand barrels, is the sixth largest producer and the 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, in order to resolve its oil sale issue and import gas from Iran to address the electricity crisis, can also initiate debt settlement and sell oil to Iran in exchange for gas. Given that Iran possesses giant refineries with a refining capacity of about 2.237 million barrels per day, it ranked second in oil processing among OPEC member states in 2025, with a share equivalent to 16% of this organization’s refining capacity and 2.1% of the global refining capacity; it also achieved foreign currency revenues amounting to 5.5 billion dollars. As a result, Iran can refine and export Iraqi oil. The government, considering its good relations with Iranian officials, should commence serious negotiations with Tehran and take steps to address the electricity outage crisis in Iraq.