Iraq Faces Energy Challenges as US Ends Iran Import Waivers

The U.S. decision not to renew energy waivers for Iraq raises alarms over its reliance on Iranian imports, affecting the electricity grid’s stability. Iraq’s dependency on Iran amounts to 22% of its total energy imports, prompting concerns and potential protests over shortages. The Iraqi government is responding by increasing fuel supplies and seeking regional energy partnerships to alleviate these challenges amidst U.S. pressure on Iran.

The United States has decided not to renew waivers for certain electricity imports from Iran, which raises concerns about Iraq’s reliance on Iranian energy. The reliance amounts to 22% of Iraq’s total gas and electricity imports, indicating possible challenges in sustaining its power grid without alternative sources. Although gas imports remain technically exempt from sanctions, U.S. authorities could impose sanctions on Iraq’s payment methods if they contravene the regulations.

Experts are cautious, noting that the continued dependence on Iranian gas is critical and might disrupt supply chains. The Iraqi Electricity Ministry spokesperson Ahmed Moussa indicated that without gas imports, the electricity grid could lose over 30% of its total capacity, leading to potential energy shortages and unrest, particularly in Basra, where blackouts have previously incited protests.

To alleviate the anticipated energy gap, Iraq is exploring a shift from gas to liquid fuels. The Oil Ministry has been instructed to boost fuel oil supplies significantly, raising the amount from 35,000 to 100,000 barrels per day. Additionally, the Iraqi government is accelerating efforts to strengthen grid connections with Saudi Arabia while investing in associated gas initiatives to decrease its dependency on Iranian imports.

This move aligns with U.S. President Trump’s broader “maximum pressure” campaign against Iran. National Security Advisor Mike Waltz articulated that the pressure would intensify if Iran progresses toward developing nuclear weapons or supports regional terrorism, including in Iraq.

Waltz also encouraged Iraq to pursue partnerships with U.S. energy firms and collaborate with the Kurdistan Regional Government to resume the operation of the Iraq-Turkiye pipeline, which has been inactive due to disputes. Nevertheless, despite ongoing diplomatic efforts, two rounds of discussions between Baghdad and Erbil have not resulted in resolving the complexities surrounding payment mechanisms and oil contracts. An anonymous source from one of the oil companies involved stated that “while tensions persist, there remains a possibility of compromise.”

In summary, Iraq’s reliance on Iranian energy imports poses significant challenges following the U.S. decision to revoke certain waivers. Measures to mitigate potential energy shortages, such as increasing fuel oil supplies and enhancing regional energy cooperation, are being implemented. However, the overarching geopolitical tensions and internal disputes complicate the path forward, highlighting the need for strategic partnerships and alternative arrangements.

Original Source: shafaq.com