Iraq's Energy Balancing Act: Between the US, Iran, and China
Iraq strives to balance US investments in its energy sector with ties to Iran and China.
1Major Deals with the US
During Prime Minister Ali al-Zaidi's visit to the US, Iraq signed 48 agreements with companies like Halliburton, Shell, and Baker Hughes. These deals aim to attract $100 billion in foreign investment to Iraq's oil sector over five years. The US views its commercial presence in Iraq as a national security interest, aiming to stabilize the country. Al-Zaidi also pledged to disarm Iran-backed militias by September 2026, when US troops are set to withdraw.
2Dependence on Iranian Energy
Iraq's national electricity grid has relied on energy and gas imports from Iran for years. In 2025, the expiration of a US waiver under its 'maximum pressure' policy on Iran jeopardized Iraq's energy supply. The Electricity Ministry warned that losing the gas waiver could cut another 30% of the country's power supply. This dependency reflects deep ties built after the 1980s war between the two nations, despite their historical conflicts.
3China's Dominance in Oil
Over half of Iraq's oil production comes from fields where Chinese firms are investors, operators, or service providers. China has long been Iraq's top crude oil buyer. However, the closure of the Strait of Hormuz in 2026 slashed Iraq's exports from 4.5 million barrels per day to 1.4 million, exposing vulnerabilities in its energy infrastructure. Unlike Saudi Arabia and the UAE, Iraq lacks alternative pipelines bypassing the Strait.
4US Political Influence
US opposition to Iran-aligned candidates played a role in al-Zaidi's rise to power. The US actively shapes Iraq's political future. According to expert Ahmed Al-Windi, America's new national security approach includes protecting commercial interests abroad. This complicates Iraq's efforts to deepen ties with the US while maintaining relations with Iran and China, forcing Baghdad into a delicate balancing act.
5Geopolitical Tightrope
Iraq struggles to balance US investments with its reliance on Iran and China. Ahmed Al-Windi of the Baghdad International Energy Forum argues Iraq can maintain ties with all three powers. However, Washington's push for greater influence in Iraq's energy sector raises concerns that Baghdad may eventually have to choose sides. This dynamic limits Iraq's room for geopolitical maneuvering in an already volatile region.
6Energy Security Challenges
US energy investments in Iraq aim to stabilize the country, but dependence on Iranian imports and China's oil sector dominance complicate this goal. Iraq must diversify its energy sources to ensure security. Experts warn that failure to address these challenges could lead to supply disruptions. The expiration of US waivers for Iranian energy imports has already strained Iraq's power grid, highlighting systemic vulnerabilities.
7Regional Energy Dynamics
Iraq's energy policies impact Middle Eastern power balances. Unlike Saudi Arabia and the UAE, Iraq lacks pipelines bypassing the Strait of Hormuz, making it more vulnerable to regional tensions. Diversifying Iraq's energy infrastructure is crucial for both domestic stability and regional equilibrium. The country's geographic position forces it to navigate competing interests of global powers actively shaping the region's future.
8Future Scenarios
Transformation in Iraq's energy sector could redefine its geopolitical stance. Increased US investment may provoke reactions from Iran and China. Experts note that maintaining balanced relations with all three powers is difficult but not impossible for Iraq. Achieving energy independence could, in the long term, shift regional power dynamics, offering Iraq greater autonomy in its foreign policy decisions.
Original article: Forbes - Business — Irak'ın Enerji Dengesi: ABD, İran ve Çin Arasında