Iraq is ending another summer of long power cuts, with the gap between demand and supply wider than in recent years. The main new factor is the collapse of Iranian gas supplies. The National reported on 18 March 2026 that Iraq had lost a significant part of its generation capacity after Iran halted gas flows following an attack on the South Pars gas field. Iranian gas is a major fuel for Iraqi power stations, and the shortfall carried into the summer, when extreme heat pushes electricity demand far above what Iraq's grid can supply.
South Pars, which Iran shares with Qatar, where the field is known as the North Field, is the world's largest natural gas reservoir. It supplies most of Iran's domestic gas and the volumes Iran exports to Iraq and Turkey. The attack took place amid the wider regional conflict that has disrupted shipping through the Strait of Hormuz.
Iraq's dependence on Iranian gas
Iraq relies on Iranian gas for roughly a third to 40% of the fuel used in its power stations, according to analysis by the Dhia Jafar energy research centre at the American University of Iraq, Sulaimani (AUIS). Iranian flows have often fallen below contracted levels in the past because of payment problems, US sanctions and Iran's own domestic shortages in winter. The centre reported that flows fell from about 35 million cubic metres a day to roughly 5 million, removing thousands of megawatts of generation.
Iraq has paid for Iranian gas and electricity through accounts held in Iraqi banks, under waivers granted by the United States from sanctions on Iran. The US ended the most recent sanctions waiver for Iranian electricity imports in 2025, adding to the pressure on Iraq's supply.
Summer demand
Iraqi summers are among the hottest in the world, with temperatures in Baghdad and Basra regularly above 45°C. Electricity demand is driven by air conditioning and rises sharply in June, July and August. Reports from Iraqi outlets and analysts put summer peak demand in the range of 55 to 60 gigawatts, while available generation has typically been far lower. Shafaq News has described the gap as around 40 GW at its widest.
The shortfall is met partly by private neighbourhood generators, which run on diesel and supply households for a fee. These generators are expensive and polluting but have become a fixture of Iraqi life. Power cuts have triggered protests in past summers, particularly in the south.
Flared gas and domestic supply
Iraq flares large volumes of associated gas produced alongside its oil, mainly in the southern oil fields. Capturing that gas for power generation has been a policy priority for years, and international companies have signed agreements to build gas processing facilities. TotalEnergies' Gas Growth Integrated Project in the south is one of the largest. These projects take years to complete, and progress has been slower than planned. Reduced oil production during the regional crisis has also cut associated gas output, according to the AUIS analysis.
Alternatives
Iraq has pursued several options to diversify supply. These include a floating LNG import terminal, electricity interconnections with Jordan, Saudi Arabia, Turkey and the Gulf Cooperation Council grid, and solar power projects. Iraq's electricity minister has cited regional crises as a reason for delays to grid connection projects, according to 964 Media. The GCC interconnection began limited operation, but its capacity is small relative to Iraq's shortfall.
Climate and the power gap
Iraq is among the countries most exposed to rising temperatures and water scarcity. Higher summer temperatures increase cooling demand and reduce the efficiency of gas turbines, which produce less power in hot air. Declining flows in the Tigris and Euphrates, linked to upstream dams and drought, reduce hydropower output and water available for cooling. These factors widen the gap between demand and supply in the hottest months.
Regional energy implications
The halt of Iranian gas exports also affects Turkey, which imports Iranian gas under a long-term contract, though Turkey has more diversified supply. Within Iran, damage to South Pars reduces gas available for domestic power and industry, which has its own history of summer and winter shortages.
For global markets, the disruption to Iraqi power generation could increase Iraq's demand for fuel oil and diesel to run power plants and private generators, at a time when product markets are already tight because of the Hormuz disruption. It may also affect Iraqi oil exports if power shortages hit oil field operations.
How the summer unfolded
Through June, July and August, Iraqi media reported scheduled outages lasting many hours a day in Baghdad and southern provinces. The government has encouraged the use of private generators to fill the gap, with Shafaq News reporting official support for generator operators as the shortfall widened. The burden falls most heavily on households that cannot afford generator subscriptions, and on small businesses that depend on refrigeration.
The cost of running generators has risen with fuel prices. Diesel prices regionally have been elevated by the disruption to tanker traffic through the Strait of Hormuz, and Iraq's own refining capacity is limited, which means some of the fuel for generators and power plants has to be imported.
Grid losses
Iraq's grid also suffers from high technical and commercial losses, meaning a large share of the power generated never reaches paying customers. Reducing those losses through metering, network upgrades and better billing would ease the supply gap, but such reforms have proved politically difficult, because they mean higher bills for customers who currently pay little or nothing.
Fiscal pressures
Iraq's state budget depends heavily on oil revenue. Lower exports during the regional crisis reduce revenue at the same time as the government faces higher costs for fuel imports and subsidies. The electricity sector already runs large deficits because tariffs are low and bill collection is weak. Investment in new generation, transmission and gas capture competes with salaries and other spending.
What to watch
Key questions include whether and when Iranian flows resume, whether Iraq can secure LNG cargoes for its floating import plans, how quickly grid connections with neighbours expand, and how the government manages load-shedding schedules through the summer. With the summer peak passing, attention turns to whether supply can be rebuilt before next year's heat.