• Iranian gas supplies to Iraq have been completely halted after an Israeli strike on Iran's South Pars gas field, slashing Iraq's power grid by 4,000-4,500 megawatts.
  • The attack, backed by the US and reported on March 17-18, 2026, caused fires and damaged storage facilities at the world's largest natural gas field, though Iranian authorities claim the situation is under control.
  • Iraq now faces intensified electricity shortages, forcing reliance on domestic fuels and risking blackouts, while global gas benchmarks spike amid tightened markets.

A Sudden Disruption with Immediate Consequences

Efforts to stabilize Iraq's fragile power grid have hit a major snag, according to a senior Iraqi official who confirmed the complete halt of Iranian gas flows. This disruption stems from a recent Israeli strike—backed by the US—on Iran's South Pars gas field in Bushehr province, the world's largest natural gas field shared with Qatar. The attack, which occurred on March 17-18, 2026, halted output at two key refineries with a capacity of 100 million cubic meters per day and damaged storage facilities, exacerbating Iraq's ongoing energy woes amid regional conflict.

Without this gas, which typically provides up to 40% of Iraq's needs, the country's electricity supply hours have been cut, though officials insist generation remains stable via alternatives like domestic fuels. "We're managing, but the situation is precarious," the Iraqi official said, speaking on condition of anonymity due to the sensitivity of the matter. Attempts to reach the National Iranian Oil Company (NIOC), which operates South Pars and produces 70-75% of Iran's gas output, for comment were unsuccessful.

Firefighting and Fallout

Iranian authorities have downplayed the impact, stating that firefighting efforts are underway and the situation is under control, but they haven't disclosed exact production loss figures beyond the two affected plants. Meanwhile, the halt has already sent ripples through global energy markets, with benchmarks like the Dutch TTF gas price rising about 5% as traders brace for potential supply tightness. This comes at a tricky time: Iraq's electricity crisis risks sparking public unrest, reminiscent of past protests over blackouts, and could increase spot demand for liquefied natural gas (LNG) in neighboring markets like Turkey.

The attack is part of a broader escalation of Israel-US strikes on Iran since late February 2026, which have killed over 1,200 people, including Iran's former Supreme Leader, and prompted Iranian retaliation via drones and missiles on targets in Israel, Iraq, Jordan, and Gulf states. In a related development, Kurdistan halted all oil and gas operations on March 14, 2026, due to militia attacks, adding to regional instability. For now, Iraq is eyeing a quick resumption of flows or potential imports from Qatar, but experts warn that winter demand and ongoing conflict could lead to further disruptions.

Correction: An earlier version of this article misstated the date of the Kurdistan halt; it was March 14, 2026, not March 2.