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Iraq halts fuel imports, declares ENERGY INDEPENDENCE after decades of instability

By ljdevon // 2025-11-06

For two decades, the story of Iraq’s oil has been written in the dust of conflict and the ink of foreign contracts, a narrative of vast potential, perpetually held hostage by instability. Now, Baghdad is attempting to author a new chapter, one where it moves from a player on the board to a hand moving the pieces. Iraq has officially announced energy independence; they have halted all imports of gasoline, diesel, and kerosene. This is a powerful political statement and a strategic pivot that sends ripples across the global energy landscape. This hard-won self-sufficiency, declared by Prime Minister Mohammed Shia al-Sudani, represents a crucial step in Iraq's long struggle to reclaim its economic sovereignty, a move that simultaneously challenges old dependencies and creates new geopolitical realities as the nation navigates the competing attentions of Washington and Beijing. Key points:

• Iraq has achieved domestic self-sufficiency in key refined fuels, a move projected to save the nation nearly $10 billion annually in import costs.
• This milestone is part of a broader national strategy to end reliance on foreign imports and retain more of the nation's vast oil wealth, with a goal to have refined products make up 40 percent of crude exports by 2030.
• The drive for energy independence is reshaping Iraq's international alliances, exemplified by a major new deal with ExxonMobil to counterbalance the deepening influence of Chinese firms in the country's southern oil heartland.
• These developments occur against a historical backdrop where Iraq's immense oil reserves, estimated at 100 billion barrels, have long been viewed by Western powers as a strategic resource for global energy security.

The directive issued on November 4th feels like a quiet culmination of a violent and chaotic history. To understand the weight of this declaration, one must remember the smoldering wreckage of the North Refineries complex in Baiji, a facility once gutted during the ISIS occupation and now symbolically reborn, operating at a formidable 380,000 barrels per day. For a country that has seen its riches flow out as crude oil only to pay to bring the refined products back in, achieving self-sufficiency is a profound correction of a costly paradox. The estimated $10 billion in annual savings is not just a line in a budget; it is money that can now flow toward schools, hospitals, and the skeletal framework of a state still in recovery, a tangible benefit for a population weary of promises.

The unspoken context of global oil politics

This push for energy autonomy cannot be divorced from the larger, often unspoken, story of global oil politics. In the mid-2000s, as the dust from the initial invasion was still settling, reports in publications like the New York Times circled a staggering figure: 100 billion barrels of oil lying beneath Iraqi soil. At a time when analysts fretted over the depletion of Saudi reserves, Iraq emerged in the strategic imagination of Western energy executives and governments as the great future prize. As scholar Michael T. Klare articulated in The Nation, this was part of a calculated American strategy: consume imported oil for as long as possible while jealously guarding domestic reserves for a rainy day or for a time when extraction became more profitable. In this context, Iraq’s oil was not just a commodity; it was a strategic asset deemed essential for maintaining corporate and national dominance well into the 21st century. Iraq’s current drive for self-sufficiency, therefore, is a direct challenge to that decades-old blueprint, an assertion that its resources will first and foremost serve its own national project.

A delicate dance between the eagle and the dragon

This newfound assertiveness is most visible in Iraq’s delicate diplomatic dance, a high-stakes game of balance between American industry and Chinese investment. The recent, strategically timed agreement with ExxonMobil to manage the colossal Majnoon oilfield is a move rich with subtext. Exxon, one of the first Western giants to return after the 2003 invasion only to later exit citing poor returns, is now being welcomed back. The deal, covering not just field operations but critical upgrades to export infrastructure and profit-sharing, is a clear signal from Baghdad. As analyst Muwafaq Abbas noted, these deals "carry political weight, signalling Baghdad’s intent to rebalance regional ties and deepen its integration with western markets." It is a deliberate recalibration, an effort to ensure that no single foreign power holds unchecked influence over its economic lifeblood. Yet, even as Exxon returns, the landscape of southern Iraq is being fundamentally reshaped by Chinese ambition. While the West was once the primary outside actor, Chinese companies are now digging the foundations for the future. A $2.5 billion seawater distribution project by China Petroleum Pipeline Engineering and a $4 billion desalination plant contract secured by PowerChina are not mere construction jobs; they are the arteries and veins that will sustain Iraq’s oil production for decades. These projects grant Beijing a deep, structural foothold in the Iraqi energy sector, a form of influence that is both less overt and potentially more permanent than the contractual agreements of Western firms. Iraq is not choosing one side over the other; it is skillfully playing both, using Western partnerships to modernize and Chinese investment to build, all in service of its own goal to catapult production from four million to over six million barrels per day by 2029. Sources include: TheCradle.co TheCradle.co Bloomberg.com

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