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Welcome to This Week in Iraq, your one-stop source for all of the most important news on Iraq's energy sector, political developments, security dynamics, and investment climate, 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
Iran protests are bringing new volatility to Iraq’s politics and markets. Iraq Oil Report interviewed over a dozen political figures in Iraq who have been closely tracking the protests. Even if the unrest across the border stops short of unseating the regime, Iraqi observers see the potential for significant impacts at home: a prolonged crisis could tighten informal dollar channels, disrupt cross-border trade, and weaken Tehran’s ability to steer Iraq’s next round of government formation. “The implications of these protests are already being felt in Iraq,” said a Kurdistan Regional Government (KRG) official speaking on the condition of anonymity. Read the full story on Iraq Oil Report.
Energy & Economy
Iraq is extending withdrawal limits on deposits from the Central Bank, Shafaq News reports. The Central Bank of Iraq (CBI) has raised the cash withdrawal limit on deposits from 7.5 million IQD to 10 million IQD per month per individual. The move, announced by the bank’s governor, is framed as a response to currency and liquidity concerns — some of which are arising because of unrest in Iran, according to Iraqi officials interviewed by Iraq Oil Report. Shafaq notes that authorities are closely monitoring currency exchange markets and liquidity indicators, and that the CBI has reiterated its commitment to mitigate inflationary trends by increasing public access to cash.
Another unit in the Baiji refinery has come back online. Iraqi News reports that the Salahuddin-3 unit in Baiji, with a 70,000 bpd capacity, has begun to supply refined petroleum products into national storage depots. Once Iraq's largest refinery, the Baiji facility has been attempting a comeback since it was taken offline in 2014 during the war with the Islamic State militant group.
Sudani tries to jump-start delayed LNG import terminal project. According to a statement from the Prime Minister’s Office, Sudani was briefed by the ministers of oil, finance, and electricity, as well as port authorities, on a project to create a floating platform to import LNG. This includes a contract with Excelerate Energy, the preparation of the navigation channel in Khor Abdullah to receive large LNG carriers, and the status of requisite port berths. The Iraqi government had been aiming to bring such imports online for the high-demand summer season in 2025, but that ambitious timeline proved unrealistic. Sudani has now instructed ministries to accelerate signing of secondary contracts, particularly pipeline works, to ensure the project is operational in time for summer 2026.
SOMO outlines 2026 plans in interview with Sharqiya reports. Ali Nizar al-Shatari, Director General of the State Oil Marketing Company (SOMO), said plans to expand and diversify export infrastructure include a third subsea pipeline in the Basra Gulf to add 600-700,000 bpd of export capacity. The Iraqi Cabinet approved funding for Sealine-3 in July 2023 but the project does not appear to have made meaningful progress since then, and Shatari did not provide a firm timeline on when to expect completion.
Meanwhile, negotiations with Turkey over the new agreement to operate the Iraq–Turkey pipeline are progressing, he said, and are now focused on transit fees and possible downstream cooperation. Existing southern and northern routes to export remain priorities over the yet-to-be-completed Basra-to-Aqaba pipeline or proposals to pipe to the Mediterranean via Syria, which he said were impacted by security issues and economic viability concerns. Shatari said to manage geopolitical and weather-related risks, Iraq has agreed on storage facilities with Oman, and is discussing strategic storage options in Singapore and other Asian hubs, potentially with international partners. He also highlighted Iraq’s shift toward fuel self-sufficiency, saying that since Iraq is a net exporter of nearly all fuels, it is now focused on reducing gasoline imports, with plans to halt them entirely as new refinery units come online.
Iraq is reportedly developing contingency plans in case the Strait of Hormuz closes, as well, Sotal Iraq reports. A government source said that the Iraqi government is preparing urgent, alternative plans to secure oil exports if the Strait of Hormuz is closed due to rising regional tensions between the U.S. and Iran in particular. This includes storage solutions outside the Hormuz chokepoint.
Iraq is preparing alternatives amid Iranian gas cut concerns ahead of summer, Baghdad Today reports. Iraq’s Ministry of Electricity is preparing contingency plans to offset possible disruptions in gas supplies from Iran ahead of the 2026 summer peak. Officials say work is underway on new gas import arrangements, including liquefied natural gas (LNG) via floating platforms and new pipeline links, to replace part of the 45–50 million cubic meters per day historically imported from Iran. The ministry aims to use these alternative supplies to support roughly 4,000 MW of gas-fired generation capacity before demand spikes later this year. The statement acknowledges that these alternatives will only partially cover the shortfall from Iran and highlights persistent structural dependence on imported gas to sustain electricity output. Meanwhile, Iraq is blaming LPG shortages on distribution failures and smuggling, Baghdad Today reports. A recent shortage and price spikes in cooking gas across Baghdad and several provinces were caused by distribution bottlenecks, hoarding, and smuggling, not a supply shortfall, the Oil Ministry says. It said LPG production is operating at full capacity and exceeds domestic demand, with output in Baghdad rising to 160,000–180,000 cylinders per day. Authorities say they have responded with direct sales, increased allocations, and security action against smuggling networks.
Iraq’s external debt to foreign markets rises above $10 billion, Shafaq News reports. Iraq’s total external debt to foreign markets has surpassed $10 billion, according to statements from the Central Bank of Iraq. The increase is attributed to a combination of debt instruments issued internationally and legacy financing arrangements, raising questions about Iraq’s external financing position amid slower oil revenue growth. Analysts cited in the report say the debt uptick could tighten fiscal space for public investment, including energy and infrastructure projects, even as oil export volumes remain strong.
Iraq is the top destination for Jordanian exports in 2025, Shafaq News reports. According to data from the Amman Chamber of Commerce, Iraq accounts for $890 million in imports from Jordan, ahead of Switzerland, Saudi Arabia, Egypt, and the UAE. This marks a 7% year-on-year increase. Jordanian re-exported foreign-origin goods accounted for a substantial share of the trade.
Iraq records low inflation of about 1.5% in 2025, among lowest in Arab world, the Iraqi News Agency reports. The Prime Minister’s adviser Mudher Mohammed Salih said the inflation numbers, provided to him by the International Monetary Fund, are a result of a period of monetary stability. He cautioned, however, that the key challenge remains translating monetary stability into productive, sustainable economic growth, warning that expanded public-sector employment without corresponding productivity gains could widen the gap between public spending and real output and increase vulnerability to oil price volatility.
Politics
Iraqi power brokers continue government formation talks. Shafaq News reports that senior figures in the Shia Coordination Framework are holding detailed discussions over how to split ministries in a prospective deal to form the next government. Some figures close to the Coordination Framework say that former Prime Minister Nouri al-Maliki is making a strong bid to retake the premiership. That outcome is hardly assured, however, and some figures outside of the Coordination Framework are signaling their opposition to Maliki. Mohammed al-Halbousi, the former Speaker of Parliament and head of the Taqaddum party, has recently made statements to warn against returning to "painful, barren days" of crisis and division that continue to haunt Iraq — an indirect yet clear rejection of Maliki.
Security
The U.S. military has begun transferring ISIS detainees from Syria to Iraq. CENTCOM announced the mission on Jan. 21, saying it began with 150 jailed ISIS fighters held in Hasakah, Syria, “to a secure location in Iraq. Ultimately, up to 7,000 ISIS detainees could be transferred from Syria to Iraqi-controlled facilities.”
U.S. forces have drawn down from Iraq even as Envoy Mark Savaya vows a crackdown on Iran-backed militias and related networks. The Iraqi government announced that U.S. forces have completed a full withdrawal from all military facilities within Iraq’s federal government-controlled territory, marking the end of the U.S.-led coalition’s on-the-ground mission against the Islamic State militant group in those areas, CNN Arabic reports. The withdrawal excludes Iraq’s Kurdistan Region, where U.S. personnel remain at bases such as Harir Air Base under a separate arrangement. Despite the reduced military presence, Mark Savaya, U.S. President Donald Trump’s envoy to Iraq, posted a statement on social media that Washington is committed to pursuing Iran-backed armed factions and associated networks in Iraq. Following a meeting with Director of National Intelligence Tulsi Gabbard and the head of the National Counterterrorism Center Joe Kent, Savaya said the priority with Baghdad is border security, anti-smuggling, anti-corruption, and reinforcing state authority.
The Region
Iraq is pushing to host a U.S.–Iran dialogue to ease tensions, The National reports. Prime Minister Mohammed Shia al‑Sudani’s government wants to mediate escalating tensions between the United States and Iran, aiming to host a bilateral meeting in Iraq’s capital. Sudani told EU ambassadors that Iraq is in contact with both Washington and Tehran to establish a dialogue platform in Baghdad that could help reduce regional instability. Iraq’s Ministry of Foreign Affairs — led by Fuad Hussein — has conducted diplomatic visits to Tehran and engaged Iranian leadership to prevent conflict spill-over, though details of planned meetings have not been publicly disclosed.
Syrian forces take control of major oil, gas fields in eastern Syria, Reuters reports. Syrian government forces have seized control of some key oil and gas assets in eastern Syria, including the al-Omar oil field and the Conoco gas plant, after clashes with the U.S.-backed Syrian Democratic Forces, according to security sources cited by Reuters. The move marks a significant shift in control over hydrocarbon infrastructure east of the Euphrates and represents a rising threat to the economic viability and autonomy of Kurdish-controlled northeast Syria. The advance comes amid reports of ceasefire talks and negotiations over the future governance of northeast Syria.
Opinion, Analysis, and Commentary
“What happens in Iran, the region, and Iraq if the Supreme Leader falls?” An opinion piece in the Iraqi outlet Jummar Media explores hypothetical scenarios – though no new factual developments – following the potential fall of the Iranian Supreme Leader, examining political, economic, and social transformations in Iran and wider implications for the Middle East. The article discusses prolonged protests in Iran, economic pressures from sanctions, internal factional dynamics, and the possibility of systemic change. It argues that a major political shift in Iran could have cascading effects on Iraq’s political landscape, including realignments among Shiite parties, pressure on Iraq’s security environment, shifts in factional alliances, and broader geopolitical recalibration — particularly given Iraq’s proximity, cross-border ties, and domestic groups historically aligned with Tehran.
Iraq could shift from energy dependency to “smart interdependence” in 2026, according to an analysis by the pan-Kurdistan think tank Center for Future Studies. The analysis, published in the CFS’s KFuture.Media news outlet, argues that Iraq’s energy sector in 2026 could move from fragile dependency on external suppliers toward what it describes as “smart interdependence,” positioning energy policy as a tool of diplomacy and state legitimacy rather than a purely technical challenge. The piece highlights chronic electricity shortages and gas import reliance as political vulnerabilities that undermine public trust and expose Iraq to external pressure. It points to domestic gas capture initiatives — including projects linked to TotalEnergies — alongside expanding solar deployment and regional power interconnections as potential inflection points. The analysis stresses that success will depend on institutional reforms, regulatory clarity, and coordinated federal–regional energy governance, particularly between Baghdad and the Kurdistan Region, to reduce strategic exposure while maintaining balanced regional energy ties.
Hezbollah disarmament debate resonates in Iraq’s armed groups discussion, according to a new report by the Carnegie Endowment for International Peace. The analysis highlights how calls for Hezbollah’s disarmament in Lebanon have influenced debates in Iraq over weapons outside state control, with rival political and armed actors invoking similar language around sovereignty and state monopoly on arms. Iraqi Supreme Judicial Council head Faiq Zidan asserted there is “no legal or constitutional justification” for armed groups’ weapons outside official institutions, and Prime Minister Sudani has publicly supported restricting weapons to state forces. However, many Iran-aligned paramilitary factions, including Popular Mobilization Forces (PMF) elements, reject disarmament, framing their arms as “sacred” until full sovereignty is achieved, complicating efforts to fold these forces into the Iraqi state.
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