Sitting on the World's Fifth-Largest Reserves, Iraq Queues for Gasoline

Filling stations across Basra shut their doors on September 19, 2026, after running out of gasoline, leaving long lines at the few outlets still pumping. A source told local media that delays in loading gasoline had disrupted deliveries across the province and warned that queues could grow further. The closures struck the governorate that produces most of Iraq's crude oil and hosts the terminals that ship it to world markets. Iraq holds the world's fifth-largest recoverable crude reserves and the second-largest refining capacity in the Arab world at roughly 1.3 million barrels per day, yet Iraqi drivers have spent much of 2026 waiting in line for fuel.

The crisis opened in early June. On June 3 the Oil Ministry publicly acknowledged a gasoline shortage and pointed to the withdrawal of the foreign contractor building a fluid catalytic cracking unit at the South Refineries. The contractor left on security grounds during the war between Iran and the United States, and its departure cost Iraq between 4 million and 5 million liters a day of high-octane gasoline. Daily output held at about 30 million liters while consumption climbed to roughly 35 million liters during the Eid holiday and pilgrimage season, a record at the time. Long queues formed in Baghdad, and the traffic police had to issue instructions on how motorists should enter and leave stations.

The squeeze then spread north. Dana Gas reduced output at the Khor Mor field after drone attacks and security threats, and by late July drivers in Erbil were waiting overnight for gasoline. Most private stations in the city stayed closed rather than sell at the lower pump price regional authorities had ordered. Fresh strikes on energy sites in Erbil and Sulaymaniyah at the end of July forced several companies to halt operations. Lower gas deliveries cut power generation, and electricity availability in parts of the Kurdistan Region fell from near-continuous service to a few hours a day. Authorities brought neighborhood generators back into use after previously restricting them on environmental grounds.

The shortage forced a policy reversal. In late 2025 the government had ordered a halt to imports of gasoline, diesel and kerosene on the grounds that Iraq had reached self-sufficiency in refined products. By September 2026 officials were arranging purchases from the United Arab Emirates and other neighboring suppliers. The Oil Ministry attributed the deficit to unscheduled maintenance at central and northern refineries and to shipping delays, and put the daily gap at around 5 million liters of gasoline.

Prices moved next. The Council of Ministers removed fuel subsidies for government institutions and several sectors starting September 1 while keeping gasoline, diesel, kerosene and liquefied petroleum gas subsidized for ordinary citizens. A distribution company document dated September 10 set gasoil at 1,000 Iraqi dinars per liter, regular gasoline at 750 dinars, improved gasoline at 1,000 dinars and premium gasoline at 1,250 dinars. The change quickly created problems of its own. Most hospitals in Dhi Qar province stopped operating because generator fuel ran out, and ambulances attached to the provincial health directorate were left idle or stuck in station queues because instructions required them to buy at the new price.

By mid-September the disruption covered Baghdad, Kirkuk, Babylon, Basra and most of the Kurdistan Region. Some government stations in the capital exhausted their subsidized gasoline by 12:00 and turned drivers away until the following day. On September 17 a member of parliament's Oil, Gas and Natural Resources Committee said the Council of Ministers was reviewing the subsidy decision for some sectors after linking it to the new supply problems, and stated that the crisis was on its way to being resolved. The Oil Ministry put average daily gasoline consumption at about 33 million liters, rising to around 38 million liters when demand spikes, and said fresh shipments would arrive shortly.

The export side shows the same strain. Iraq's oil exports started September at about 3 million barrels per day and had slipped to roughly 2.4 million barrels per day by the third week of the month, still above the August average of about 2.354 million. That August figure was the strongest since the war began, and it stands against a combined average of roughly 526,470 barrels per day across May and June. Before the conflict Iraq moved about 3.4 million barrels per day through the Strait of Hormuz. In August the oil minister put crude production at 2.75 million barrels per day against an OPEC ceiling of 4.2 million.

Baghdad is trying to route around the chokepoint. The ministry is raising crude exports through Turkey's Ceyhan port toward 750,000 barrels per day from Kirkuk and Kurdistan fields, and has outlined plans to lift pipeline export capacity through Syria and the Iraq-Turkey Pipeline by more than 1 million barrels per day. A strategic plan covering 2027 to 2030 targets output of about 10 million barrels per day by the end of the decade, and Iraq has asked OPEC and its allies to calculate its future quota from a baseline of 6 million barrels per day during the current capacity audit.

The Strait of Hormuz remains the binding constraint. It has been effectively closed to routine commercial traffic since February 28, 2026, with a short reopening in June that broke down in July. Monitoring data recorded 8 transits on September 13 against a pre-crisis baseline near 85 per day, and Brent has traded around 104 dollars a barrel. Vessels that still move through the waterway travel in escorted convoys or with tracking switched off, and war-risk insurance has multiplied.

Iran-backed armed groups are the sharpest unresolved risk hanging over Iraqi supply. These factions have struck targets linked to the United States inside and outside the country since the war began on February 28, and they have coordinated with Yemen's Houthis in attacks on Saudi Arabia. Prime Minister Ali al-Zaidi, in office since May, set September 30 as the date by which all weapons must come under state control, a deadline tied to the departure of the last US-led coalition troops. Asaib Ahl al-Haq, Kataib Imam Ali and Moqtada al-Sadr's Saraya al-Salam say they have placed their arms under state authority. The most powerful factions closest to Tehran, namely Kataib Hezbollah, Harakat Hezbollah al-Nujaba and Kataib Sayyid al-Shuhada, have refused outright or attached conditions the government cannot meet quickly, including the departure of Turkish forces and the disarmament of the Kurdish Peshmerga. Some groups argue their weapons came from Iran and should go back there rather than to Baghdad. An adviser to the prime minister said on September 19 that the committee handling the process has no fixed timetable, and Iraqi analysts expect no genuine disarmament on September 30. The Badr Organization has warned that forcing the issue would open the door to internal strife. Joint US and Saudi strikes on Iran-backed groups on Iraqi soil followed the late-July attacks on Saudi Arabia, and on August 17 the Counter-Terrorism Service detained the reconnaissance chief of Harakat Hezbollah al-Nujaba over drone strikes on neighboring countries.

The link between those groups and the fuel queues is direct. Drone and rocket attacks attributed to Iran-aligned factions since February pushed foreign operators out of refinery upgrade work in the south and forced Dana Gas to cut output at Khor Mor in the north. Those two losses created the gasoline deficit and the power deficit that Iraqi households now feel at the pump and in the dark. The factions also hold seats in parliament, staff government positions and run extensive business networks, which limits how far any oil ministry reform can go.

Israeli strikes on the South Pars field on March 18 led Iran to halt gas flows to Iraq, a supply that had covered between a third and 40 percent of Iraqi gas and power needs. Households and businesses shifted onto private diesel generators, which widened the fuel gap further. Washington has pressed Baghdad to cut its energy dependence on Tehran and to sign contracts with American firms, while Tehran treats its Iraqi allies as leverage in the broader conflict.

Corruption is part of the fuel story too. Officials close to the government have not ruled out deliberate interference inside the Oil Ministry, an assumption tied to arrests of ministry staff accused of embezzling large sums. A June 27 wave of 47 anti-corruption arrests reached politicians and government officials.

The Kurdistan Region remains the weakest link. A member of the Iraqi parliament's Oil and Gas Committee said the region needs about 7 million liters of gasoline a day, while the 50,000 barrels of crude currently allocated for local refining yield only about 2 million liters. Roughly 1 million barrels a day are allocated for refining and fuel production in central and southern Iraq, and Kurdish representatives are pressing for 14 percent of the national refining allocation.