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Welcome to This Week in Iraq, your one-stop source for all of the most important Iraq news, curated by the editors of Iraq Oil Report. To sign up and receive this free newsletter in your inbox every week click here.
Top Stories
Iraq has shut down millions of barrels of daily oil production due to the outbreak of war between Iran, Israel and the United States. The effective closure of the Strait of Hormuz has taken Iraq's southern exports offline, which had been responsible for over 3.2 million barrels per day (bpd) of oil sales. As a result, most fields around the country have been either shut down or severely curtailed.
Damascus is consolidating authority over Syria's oil and gas sector, and the Kurdish-led Autonomous Administration of Northern and Eastern Syria (AANES) is losing control of several producing oil fields. The paradigm shift carries significant implications for foreign investment by international oil companies in Syria, as well as for Kurdish autonomy in northeast Syria, and the cross-border flow of oil into the Kurdistan region of Iraq. Read the full Iraq Oil Report story here.
The Impact of Regional War on Iraq
Iraq is likely to suffer significant economic harm from the war. Economist Nabil al-Marsoumi warns that Iraq faces a "financial execution" with the shutdown of southern oil exports costing $200 to $255 million per day, which could prompt the government to freeze state salaries. Without viable alternatives to Basra Gulf exports that need to transit the Strait of Hormuz, Iraq is set to incur the biggest economic losses of any country that is not a direct party to the war, according to analysts interviewed by Arabi21 and Al-Quds.
Iraq could also be facing an electricity crunch in the weeks ahead due to a significant drop in associated gas production as oil fields reduce their output. In Iraqi Kurdistan and northern Iraq, an estimated 3,000 MW of power generation is already offline due to the precautionary shutdown of the Khor Mor gas field, which has been a frequent target of Iran-linked attacks in recent years. Power plants in southern Iraq have depended heavily on associated gas for feedstock, especially from the Basra Gas Company, which processes gas from Rumaila, Zubair, and West Qurna 1. Days before the fighting began, the Iraqi Oil Ministry had announced a milestone of capturing 86 percent of associated gas production from those fields, according to Shafaq News. A small fraction of those losses could be offset by the startup of commercial operations at the new Ratawi solar plant, built as part of the Gas Growth Integrated Project (GGIP) led by Frane's TotalEnergies, which is expected to begin coming online soon, Attaqa reports. Electricity supply could also get a boost from the Iraq-GCC electricity interconnection project, which had been scheduled to begin within a month. The Iraq Electricity Ministry said final planning meetings have been scheduled, but it is unclear how those timetables might be affected by the outbreak of regional war.
Iraq's shipping industry is also reeling. The Iraqi Ports Company said the southern port of Umm Qasr is currently empty of commercial vessels due to the Strait of Hormuz closure, and shipping insurance premiums for Iraq routes have spiked by 60 percent, halting three cargo lines from China, 964Media reports. Iraq's oil marketing company, SOMO, has pointed out that the current shipping interruptions underscore the logic behind its previous plans to execute a "balanced strategy" to diversify crude buyers across Asian and European markets, the Iraqi News Agency reports. Asian buyers make up the lion's share of SOMO's customers, as Iraq has helped fill the gap in India left by Russia sanctions, Shafaq reports.
Pro-Iran paramilitary leaders in Iraq are advocating for Iraq to enter the war in support of Iran. The Harakat al-Nujaba movement, led by Akram al-Kaabi, has issued a sharp critique of the Shia Coordination Framework and Prime Minister Mohammed Shia al-Sudani, labeling the government’s refusal to enter the regional conflict as a "weak" position that fails to honor Iran’s historical support for Iraq, 964Media reports. While Iraq seems highly unlikely to enter the war, the criticism highlights the increasing difficulty for Iraqi leaders of maintaining political balance between Iran and the U.S. — and the likelihood that armed groups within Iraq, including some nominally under the control of the Iraqi state, are inclined to become increasingly involved in the conflict. Sudani has insisted that the state holds the sole authority over decisions of war and peace, while Nujaba member Mahdi al-Kaabi has stated that the movement operates independently from the state and will not abide by government policies if they are seen as accommodating U.S. interests or failing to support Tehran. He also warned that the group does not require a religious fatwa to defend the region against "Greater Israel" and "American projects."
The U.S. is reportedly exploring a partnership with Iranian Kurds based in Iraqi Kurdistan to fight the Iranian regime. President Donald Trump has held phone calls with not only Masoud Barzani and Bafel Talabani this week, but also with "a senior figure" in the Kurdistan Democratic Party of Iran (KDPI), according to a report by the Financial Times. The diplomatic engagement was immediately followed by Iranian drone strikes against the headquarters of Iranian Kurdish opposition parties KDPI, PAK, and Komala in Koya, Sulaimaniya, and Erbil. According to the FT, as well as reports from the New York Times and CNN, the CIA has been working with Kurdish opposition groups based in Iraq to provide arms and explore further cooperation in potential ground operations. Such support creates the risk that Iraqi Kurdistan will be drawn further into the theater of war while also creating an acute dilemma for Iraqi Kurdish leaders who cannot afford to alienate either Washington or Baghdad.
Politics
Former Iraqi Prime Minister Nouri al-Maliki has hit another setback in his bid to return to power. The President of the Supreme Judicial Council, Faiq Zaidan, has proposed an amendment to Article 76 of the Iraqi Constitution to permanently resolve ambiguity around who has the first chance to form a government after national elections, Shafaq News reports. The proposal suggests defining "the largest parliamentary bloc" as the electoral list that wins the highest number of seats during national elections, rather than the coalition formed through post-election alliances within the first parliamentary session. Zaidan argued that the current ambiguity has historically served as a primary driver for protracted political deadlocks and significant delays in government formation. By explicitly tying the right to nominate a prime minister to election results, the amendment could help mitigate the legislative stalemates that have characterized post-election periods in Iraq. In the case of Iraq's most recent elections, such an amendment would also seemingly give Sudani a boost in his bid for a second term, since the sitting prime minister's electoral list won a modest plurality.
A high-level meeting of the Coordination Framework held at the Government Palace in Baghdad was described as "stormy," according to political sources speaking with 964 Media. The first official gathering of the Shia Islamist coalition following the death of Iranian Supreme Leader Ali Khamenei was notable for the absence of Nouri al-Maliki, who officially cited "fasting fatigue," but is widely believed to be signaling his resistance to pressure around withdrawing his candidacy for the premiership. While Maliki has reportedly suggested the Framework could issue a collective statement of withdrawal on his behalf to maintain a unified front, no such consensus has been reached.
Analysis and Commentary
Strategic Risks and Regional Fallout of Operation Epic Fury, a roundup of analysis from the Atlantic Council.
CBRN Proliferation Risks Following Iranian Strikes, an analysis from the Stimson Center warning that Operation Epic Fury strikes could inadvertently trigger a proliferation crisis involving Iran's chemical, biological, radiological, and nuclear (CBRN) materials.
Constitutional and Implementation Risks in Iraq-Chevron Agreements, an analysis by independent Iraqi oil expert Ahmed Mousa Jiyad for Iraq Business News of Iraq's preliminary agreements for the West Qurna 2, Nassiriya, and Balad oil fields.
Strategic Risks and Economic Impacts of Epic Fury Strikes, a report from the Stimson Center warning that airpower alone is unlikely to achieve long-term political objectives like regime change in Iran while creating steep costs for regional stability and the global economy.
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