A 120-day waiver from the US that permits the Iraqi purchase of Iranian energy is set to expire today.
Since 2018, the US has granted Iraq waivers to import Iranian energy and sanctioned Iranian energy. Iraq is under pressure to wean itself off Iranian energy. However, its inability to capture flared gas and frequent power shortages, which have exacerbated anti-government protests, have contributed to Iraq’s on-going dependence.
Expect the waiver to be extended, permitting Iraq to engage in financial transactions with Iran in the short-term. Yet, the US is likely to continue strengthening its commitment to Iraqi energy. To this end, during a meeting between US President Joe Biden and Iraqi Prime Minister Mustafa Al-Kadhimi early this week, the two announced a $2 billion project with General Electric that will connect Iraqi and Jordanian electricity grids.
Nevertheless, considering the slow progress of Iraq’s $8 billion worth of energy deals with US oil companies and ExxonMobil’s decision to exit Iraq, expect the deal to struggle to come to fruition. Nonetheless, as Iran continues to overcharge Iraq for its energy supply, Iraq is likely to lean towards dependence on the US by persuading an American company to replace ExxonMobil in the short-term.
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