Iran Halts Gas Supplies to Iraq, Cutting 4,000-4,500 MW from National Grid

Iranian Gas Supplies to Iraq Cease Abruptly

On Tuesday, December 23, 2025, Iraq's electricity ministry announced the complete cessation of gas supplies from neighboring Iran. The sudden halt has significantly impacted Iraq's national power grid, leading to a reduction of between 4,000 and 4,500 megawatts (MW) in electricity generation capacity.

Ministry spokesman Ahmed Mousa confirmed the stoppage, stating that some power units were consequently shut down, while others were forced to decrease their output. Iran reportedly informed Baghdad of the decision, citing 'emergency conditions' or 'unforeseen circumstances' as the reason, though no further details were provided.

Impact on Iraq's Power Sector

Iraq is heavily reliant on Iranian gas, which accounts for approximately 33% to 40% of its total gas and power needs. The country's electricity generation largely depends on fossil fuels, with natural gas being the largest source, contributing over 50% of the total in recent years. The current disruption exacerbates Iraq's chronic power shortages, which stem from political instability, insufficient investment in infrastructure, and a heavily subsidized electricity system.

In response to the cut, the Iraqi Electricity Ministry, in coordination with the Ministry of Oil, has initiated a switch to domestic alternative fuels to maintain power plant operations. Spokesman Mousa emphasized that electricity generation remains 'under control' despite the shortfall.

Historical Context and Sanctions

This latest halt follows a period of declining Iranian gas exports to Iraq throughout 2025. Exports had already fallen by about 40% between April and August of this year. This reduction was largely attributed to the United States' tightened enforcement of sanctions against Iran and the revocation of a long-standing waiver that had allowed Iraq to pay for Iranian electricity and gas imports.

The U.S. has consistently pressured Iraq to diversify its energy sources and reduce its dependence on Iran. Efforts to secure alternative supplies have faced challenges; for instance, a proposed deal in September 2025 to import Turkmen gas via Iran was reportedly blocked by the U.S. due to sanctions.

Future Outlook for Iraq's Energy Needs

Iraq has been working to bolster its domestic power capabilities. As of October 2025, the country's electricity production capacity ranged between 24 GW and 28 GW, with ambitious plans to increase this to 48 GW by 2028 through agreements with international firms like GE Vernova and Siemens. Despite these efforts, the nation's total installed capacity of 31.3 GW in 2023 often sees only about half produced due to various operational issues. The Iraqi electricity ministry stated that it had prepared for peak winter demand through maintenance and upgrades and would continue coordination with the oil ministry until Iranian gas flows resume.