By Pishtaz | 2026-01-24

In late December 2025, Iraqi officials announced a total halt in gas supplies from Iran, citing "unforeseen circumstances" in a telegram from Islamic Republic's authorities.

The stoppage removed between 4,000 and 4,500 megawatts from Iraq's national grid, triggering widespread electricity shortages during a period of peak winter demand.

Iraq relies on Iranian natural gas for roughly 30-40 percent of its electricity generation, making the Islamic Regime in Tehran's exports central to Baghdad's energy security.

The Islamic Republic regime's sudden cessation of gas deliveries reflects a broader crisis within the country and a declining ability to meet energy commitments.

Although the Islamic Regime in Tehran has framed the interruption as technical and unforeseen mounting domestic pressures point to deeper and long-standing structural weaknesses.

It has faced criticism for underinvestment in energy infrastructure, systemic corruption and resource allocation policies that prioritize political objectives over long-term economic sustainability.

Proxy priorities

For years, the Islamic Republic has devoted substantial revenue and logistical capacity to supporting allied militias and proxy groups across the Middle East.

These include the Houthis in Yemen, Hizbullah in Lebanon and various Shia militia groups operating inside Iraq.

This strategic prioritization has diverted scarce resources away from domestic energy needs and weakened the Islamic Republic regime's ability to maintain reliable export commitments.

In Yemen, US sanctions imposed on April 28, 2025, targeted vessels and companies shipping Iranian oil and gas products to Houthi-controlled ports.

The measures highlighted Washington's determination to disrupt funding channels that sustain Islamic Republic-aligned proxy networks across the region.

Islamic regime's backing of Hizbullah has similarly complicated energy cooperation and delayed broader regional initiatives in the eastern Mediterranean.

During prolonged negotiations between Lebanon and Israel over offshore gas rights, Hizbullah opposed terms it viewed as unfavorable.

This opposition delayed agreements and limited Lebanon's ability to advance energy development during a period of severe economic crisis.

Eroding credibility

Interaction between external economic pressure and internal mismanagement has intensified the Islamic Republic's energy export crisis.

Since 2024, US sanctions targeting Iran's oil, gas and petrochemical export networks have steadily tightened.

US Treasury Department's Office of Foreign Assets Control (OFAC) has designated numerous front companies, shipping firms and vessels involved in transporting Iranian energy products.

The regime's failure to meet energy commitments to neighboring states coincides with growing domestic unrest and mounting public frustration inside the country.

Diversion of resources toward proxy warfare, combined with sanctions-driven isolation, has reduced the Islamic Regime in Tehran’s capacity to serve both foreign customers and its own population.

As Iraq seeks alternative energy sources, the Islamic Republic's credibility as a regional supplier faces mounting scrutiny.

The gas cutoff underscores policy choices that have prioritized geopolitical influence over long-term economic stability and reliable regional partnerships.