Trump Administration Halts Iraq’s Import of Iranian Energy

New Policy Signals Stronger Stance Against Iran / AFP

The Trump administration has decided to end Iraq’s long-standing permission to import energy from Iran, a move reported by Reuters and News1. This decision, announced by the U.S. State Department, aligns with President Donald Trump’s “maximum pressure” campaign targeting Iran’s economic resources, particularly its oil and gas exports. The policy shift terminates a sanctions waiver previously granted to Iraq, reflecting a broader strategy to curb Iran’s financial lifeline and limit its regional influence. During a press interaction at the White House on March 7, 2025, Trump hinted at imminent developments with Iran, expressing hope for a peaceful resolution while emphasizing a hardline approach.

The U.S. State Department explained that discontinuing the sanctions waiver for Iraq’s Iranian energy imports is a deliberate step to choke Iran’s crude oil revenue streams. Officials underscored that no economic relief would be extended to Tehran, branding Iran as an unreliable energy supplier for Iraq. They urged the Iraqi government to swiftly reduce its dependence on Iranian energy resources, pointing out that Iran’s contribution to Iraq’s power grid is relatively minor. According to the State Department, Iranian electricity accounted for just 4% of Iraq’s total power consumption in 2023, a figure they argue minimizes the impact of this policy change. However, this claim contrasts with Iraq’s historical reliance on Iran for a significant portion of its energy needs, raising questions about the immediate feasibility of this transition.

Iraq’s energy sector has long grappled with instability, exacerbated by decades of conflict and underinvestment in infrastructure. Iran has been a critical supplier, providing both electricity and natural gas to help bridge Iraq’s chronic power shortages. The now-expired waiver had allowed Iraq to purchase Iranian energy without facing U.S. sanctions, a necessity given its limited domestic production capacity. Farhad Alaaldin, foreign affairs advisor to the Iraqi prime minister, acknowledged that the termination of this exemption would pose “temporary operational challenges.” He emphasized Iraq’s commitment to achieving “energy independence” through strategic investments, though he admitted that fully replacing Iranian imports would take time. This development comes as Iraq works to bolster its domestic energy production, including tapping into its vast natural gas reserves and expanding renewable energy initiatives.

The roots of this policy trace back to the 2015 Joint Comprehensive Plan of Action (JCPOA), a nuclear deal between Iran and six world powers, including the United States. Under the agreement, Iran curtailed its uranium enrichment and missile programs in exchange for sanctions relief. However, in 2018, during Trump’s first term, the U.S. withdrew from the deal, reinstating punitive measures that effectively dismantled the accord. Since then, Iran has ramped up its uranium enrichment, with a recent International Atomic Energy Agency report, cited by Reuters on February 26, 2025, revealing that Iran’s stockpile of 60% enriched uranium had surged by 92.5 kilograms to 274.8 kilograms since November 2024. This escalation has fueled U.S. efforts to tighten the economic noose around Tehran, with Iraq’s energy imports emerging as a key pressure point.

For Iraq, the stakes are high. The country’s electricity demand, which peaks during scorching summer months, far outstrips its current generation capacity. Historically, Iran supplied up to one-third of Iraq’s power needs, delivering around 7 gigawatts at its peak, though recent estimates suggest this has dropped to approximately 1.5 gigawatts as Iraq diversifies its sources. The Washington Institute notes that Iraq aims to produce 28 gigawatts by the summer of 2025, covering 60-75% of its projected 37-47 gigawatt demand. Yet, without an immediate alternative to Iranian energy imports, power outages could intensify, potentially sparking public unrest reminiscent of the 2018 Basra protests triggered by similar disruptions. Iraq’s government has outlined plans to modernize its energy infrastructure, including partnerships with international firms and a push for solar and wind projects, but these initiatives remain years from full realization.

The Trump administration’s decision has sparked debate over its implications for Iraq’s stability and U.S.-Iraq relations. Critics argue that cutting off Iranian energy imports without ensuring viable substitutes risks destabilizing an already fragile nation, particularly as it balances ties with both Washington and Tehran. Supporters, however, see it as a necessary step to weaken Iran’s regional leverage and compel Iraq to accelerate its energy self-sufficiency. The State Department has pledged support for Iraq’s transition, though specifics remain vague. Meanwhile, Alaaldin reiterated that Iraq’s long-term goal is to achieve energy autonomy by 2028, a target that hinges on sustained investment and political will.

This policy shift underscores the intricate interplay of geopolitics and energy security in the Middle East. For Iraq, the loss of Iranian energy imports presents both a challenge and an opportunity to rethink its energy future. While the U.S. aims to isolate Iran economically, the ripple effects on Iraq’s power grid and populace will test the resilience of its government and the patience of its citizens. As Iraq navigates this abrupt change, the success of its energy independence efforts will likely shape its trajectory for years to come, with global observers closely monitoring the outcome of this high-stakes maneuver.