From darkness to light: Iraq overcomes electricity crisis amidst scorching heat wave with Iranian gas swap

In a significant development, the suffering of Iraqis from the electricity crisis has ended amidst a scorching heat wave.

The country had been grappling with a severe electricity shortage due to its reliance on gas-powered plants and an inability to pay its dues to Iran, its gas supplier, in light of US sanctions on Iran.

Tehran decided to cut off gas supplies, plunging Iraq into darkness with temperatures soaring above fifty degrees Celsius.

However, the Iraqi government swiftly sought a tactical or interim solution, leading to a formula where monetary payments were replaced by barter.

Baghdad signed an agreement with Tehran to swap Iranian gas for Iraqi oil, understanding that this step would circumvent the need for US approval to make dollar payments to Iran.

Iraq relies on Iranian gas for 40% of its energy resources, amounting to approximately $4 billion annually.

Observers believe that the oil-for-gas agreement will buy time for Iraq to overcome the challenges of the summer season. While Iran may not benefit from the much-needed dollars, it gains political leverage by affirming its influence and the Iraqi dependency on it.

So, what is the stance of the United States?

While Washington has been pressuring Baghdad to reduce its reliance on Iran, it did not comment on the Iraqi-Iranian deal.

Nonetheless, just a few hours earlier, it welcomed Iraq's $27 billion agreement with French energy company TotalEnergies to undertake investments in the gas, oil, and renewable energy sectors.

Jake Sullivan, National Security Advisor to the White House, described it as "a major step toward achieving Iraq's energy self-sufficiency and meeting its climate goals."

Amidst the urgent need for Iranian gas and the gradual development of renewable energy sources with TotalEnergies, which will take several years to become operational, Iraq was on the brink of darkness.

As a member of OPEC+ and possessing one of the world's largest oil reserves, the country has long suffered from mismanagement and the detrimental impact of conflicts and volatile policies on its electricity grid.