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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
Iraq’s Oil Ministry is slashing upstream spending by $1.4 billion in an attempt to address a potential fiscal crisis driven by persistently lower-than-projected oil prices. The ministry's austerity drive is forcing state oil companies to find quick and substantial savings in 2026 field budgets that had already been approved in late 2025, including at fields operated by IOCs, according to multiple state oil company officials and written Oil Ministry directives. Read the full story by Iraq Oil Report.
Iraq’s nationwide oil production grew in 2025, as OPEC constraints eased and refinery capacity increased. Production increased by 120,000 bpd year-on-year, peaking in October but dropping in November and December due to export infrastructure disruptions and maintenance-related field outages. Federal fields averaged 4.50 million bpd in 2025, up from 4.36 million bpd the prior year, while fields managed by the Kurdistan Regional Government (KRG) declined slightly, according to an Iraq Oil Report analysis based on data gathered independently from the country's producing fields.
Politics
U.S. President Donald Trump issued a strong statement opposing Nouri al-Maliki’s nomination to return to the premiership. “Iraq might make a very bad choice by reinstalling Nouri al-Maliki as Prime Minister,” Trump wrote on Jan. 27, arguing that "last time he Maliki was in power, the country descended into poverty and total chaos." Trump threatened that the U.S. "will no longer help Iraq” if Maliki takes office. The statement has sent party chiefs and parliamentarians back to the negotiating table, Shafaq News reports.
Iraqi sovereignty over oil revenues has returned to the spotlight after the U.S. threatened to cut off dollar access due to Iranian influence in Baghdad. Sky News Arabia reported a warning issued by U.S. Secretary of State Marco Rubio that a future Iraqi government dominated by Tehran’s influence would undermine Iraqi interests and strain ties with Washington. According to Reuters, U.S. Chargé d’Affaires Joshua Harris gave a strong warning to Shiite political figures. A State Department spokesperson said the U.S. supports Iraqi sovereignty but opposes any role for Iran-aligned militias in state decision-making. Alhurra reports an unnamed Iraqi government adviser said Washington considers the inclusion of Iran-backed groups in the next government a “red line,” and claimed the U.S. could also suspend the monthly cash transfers Iraq relies on for salary payments and budget execution.
Iraqi oil revenues flow into an account at the Federal Reserve Bank of New York controlled by the Central Bank of Iraq, under an arrangement dating back to 2003. A political discussion aired on Al-Hadath explored the U.S. messaging to Iraqi leaders, noting the American power over oil revenue confers leverage in government formation. The Prime Minister’s adviser, Hussein Allawi, rejected claims of external dictates, describing recent U.S.–Iraq contacts as an “exchange of views” and stressing that government formation remains an Iraqi constitutional process that is still incomplete.
Energy & Economy
Iran has stopped its gas deliveries to Iraq. Iraqi News reports the halt in gas has cut off 4,000-4,500 MW from the national power grid, and reduced daily electricity supply hours, as some generating units shut down and others were forced to reduce output. Iran’s interruption of gas shipments — one of the country’s main power fuel sources — reflects Tehran’s own domestic energy needs. Iraq still relies on Iranian gas to help meet electricity demand, while domestic generation lags far below peak consumption. Meanwhile, Iraq’s Oil Ministry is planning on floating LNG platforms to provide 500-700 million standard cubic feet per day, worth 2,000-3,500 MW of power over the summer, Al-Sabah Al-Jadeed reports. A dedicated pipeline will run from Khor al-Zubair to the Bismayah power plant, Alghad Press reports. The Iraqi government originally aimed to have that infrastructure ready in time for summer 2025, but did not meet that deadline.
Iraq continued negotiations with U.S. company HKN Energy for the development of Hamrin field, according to a statement from Iraq's North Oil Company (NOC). Officials from NOC met a delegation from HKN Energy in Baghdad on Jan. 22, "covering technical and financial details of the project." The Oil Ministry has previously said it wants to increase production from about 25,000 bpd currently up to 60,000 bpd and capture associated gas to supply power plants.
The Chemchemal gas field will serve local industrial consumers in 2027. Attaqa reports a long-term gas sales agreements signed by Dana Gas, Neft Al-Hilal, and partners within the Pearl Petroleum consortium will cover up to 142 million standard cubic feet per day natural gas over 10 years to major cement and steel producers in the Bazian and Erbil industrial corridors, starting when production begins in the second half of 2027. The initiative also includes construction of new pipelines – such as a 40 km connection linking Chemchemal directly to industrial users – replacing heavier and costlier fuel oils.
UNESCO may delist the Hawizeh Marshes due to encroaching oil operations. Daraj reports in an investigation that development of the Halfaya and Hawiza projects in Missan province have dried wetlands, killed biodiversity, and polluted waterways. Water extraction, leaks, toxic waste discharge, and gas flaring have reportedly led to displacement, collapsed fisheries, buffalo die-offs, and surging cases of cancer. Critics decry weak regulation and unenforced contract clauses, allowing foreign firms to evade accountability amid Iraq's push for production growth.
Anbar’s silica reserves could be a potential source for electronic chip manufacturing. The Iraqi News Agency reports that western Anbar's desert holds vast, high-purity silica sand deposits, putting proven reserves around 600 million tons at 98-99% purity, potentially rising to nearly one billion tons. This natural quality, which minimizes processing, gives Iraq a global edge for producing silicon via high-temperature smelting, opening doors to strategic industries like electronic microchips.
Baiji’s Salahuddin-3 unit has resumed operations as Iraq's largest refinery continues coming back online after being largely destroyed in the aftermath of the war against the Islamic State militant group. CNN Arabic reports the Oil Ministry has confirmed the 70,000 bpd capacity unit has returned to operation and that refined products from the unit have already reached national storage depots. While an increase in Baiji's capacity is a positive step toward reducing Iraq's reliance on imported fuels and improving fuel supply, it is unclear whether the facility can operate at full capacity in the short term given crude supply constraints.
Security
Kata’ib Hezbollah is warning of broader regional conflict if Iran is targeted, IraqiNews reports. The group issued a statement urging supporters to be ready for heightened conflict should a wider confrontation target Iran and warned that such a war “would not remain contained.” Iran-backed armed groups in Iraq largely stayed on the sidelines during the Israel-Iran war in June 2025, but the recent statement from Kata'ib Hezbollah suggests that posture could shift if the U.S. attacks Iran again now, with potential spillover consequences for Iraq.
Region
Gulf states view Iran’s internal tensions primarily as a regional risk-management challenge, an Emirates Policy Center analysis highlights. Gulf governments are closely observing the ongoing political and security tensions inside Iran, interpreting the unrest and geopolitical uncertainty not as an immediate trigger for regime change but as a complex risk to regional stability that requires careful management. They emphasize strategic caution – avoiding overt confrontation while preparing for spillovers that could affect Gulf security and economic interests.
Opinion, Analysis, and Commentary
Iraq’s financial crisis has slipped out of government control, Iraqi writer Hussam Al-Ubaidi argues in a commentary published in Kitibat. He warns that Iraq’s current financial pressures have moved beyond short-term management tools, as the state is increasingly constrained by structural dependence on oil revenues, dollar liquidity, and external financial controls. He contends that repeated reliance on emergency measures – rather than structural reform – has left Baghdad vulnerable to currency volatility, payment disruptions, and external leverage, particularly as political paralysis delays budgetary and fiscal decision-making. Al-Ubaidi frames the crisis as a governance problem as much as an economic one, arguing that without political consensus and reform, fiscal pressures will continue to compound rather than stabilize.
The Kurdistan Region of Iraq is positioned as a U.S. energy anchor in post-war Syria, Ruwayda Mustafah argues in The National Interest.The analysis frames the KRI as a stabilizing diplomatic buffer in the Syria-Iraq-Turkey triangle, leveraging relationships with Turkish, Gulf, European, and U.S. partners to mediate between Damascus and the SDF.
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