Iraq’s Gas Deal Through Iran Blocked by U.S.

By Alexander Miller, consultant in energy markets. Eurasia Business News, September 19, 2025. Article n°1796

Iraq’s attempt to alleviate its chronic power shortage by importing natural gas from Turkmenistan routed through Iran has been blocked by the United States due to sanctions concerns. The deal, proposed in 2023, would have seen Turkmenistan supply around 5 billion cubic meters of gas annually to Iraq, with Iran facilitating the transit and retaining a portion of the gas for its own needs. Although Iraq offered to have third-party international monitors ensure compliance with U.S. sanctions, the Trump administration did not grant approval as part of its “maximum pressure” campaign against Iran.

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This U.S. refusal to approve the swap deal has deepened Iraq’s energy crisis, leaving Baghdad scrambling for alternative gas supplies to meet its electricity demands. Iraq already relies heavily on Iranian gas, which meets about one-third of its power generation needs, but recent cutbacks due to the end of U.S. sanctions waivers have reduced supplies significantly. The failure of this plan forces Iraq to seek alternatives such as LNG imports from Qatar and Oman and partnerships with international energy companies to boost domestic gas production.

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The blocked deal highlights Iraq’s difficult position caught between its two key allies, the U.S. and Iran, and exacerbates existing electricity shortages that have caused economic hardship and social unrest among its population.

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© Copyright 2025 – Eurasia Business News. Article no. 1796