The US Department of State has extended its four-month sanctions waiver to Iraq, allowing it to continue purchasing electricity from Iran. This extension is crucial as Tehran can only use the funds for non-sanctionable purposes, such as buying food and agricultural items for humanitarian needs.

Since 2018, the US has regularly granted exemptions to Iraq, helping it meet immediate energy needs without breaching US sanctions. Washington has urged Iraq to reduce its dependence on Iranian energy and natural gas, despite ongoing sanctions against Tehran.

During a recent meeting with Treasury Department officials, Iraq's Foreign Minister Fuad Hussein highlighted Iraq’s reliance on these US exemptions for Iranian oil imports. The extension comes as Iraq faces frequent power outages due to extreme temperatures exceeding 50°C (120°F) and high demand for cooling, stressing the country’s aging electrical infrastructure.

US sanctions on Iran, which target Tehran's nuclear program and support for extremist groups, complicate Iraq’s efforts to pay for Iranian gas, vital for its electricity generation. Iran has pressured Baghdad by halting natural gas exports, exacerbating the power shortages. Consequently, Iraq must pay for Iranian electricity through restricted accounts, with Iran using these funds for humanitarian purposes after US approval.

Despite heavy reliance on Iranian gas, Iraq is investing in projects to utilize flared gas and renewable energy to bolster its electricity generation capabilities.