Long queues formed at filling stations across Baghdad as Iraq's diesel shortage deepened, with the oil ministry preparing emergency imports, Shafaq News reported on July 28.

The purchases would reverse a policy set eight months ago, when the prime minister ordered a halt to imports of gasoline, diesel and kerosene on the grounds that Iraq had achieved self-sufficiency in refined products. The gap has reopened because foreign contractors abandoned refinery upgrade work during the Iran war, and because reduced Iranian gas deliveries have pushed households and businesses onto private generators that burn diesel.

Dozens of vehicles were seen waiting at filling stations in the capital, with drivers reporting longer waits and greater difficulty obtaining supply. The shortage has affected Baghdad and several other provinces.

Industry specialists attribute the squeeze to higher domestic demand from summer generator use, combined with reduced output at several refineries undergoing maintenance. The two have widened the gap between production and consumption.

The oil ministry is preparing to bring in additional volumes to keep private generators and local markets supplied. Officials have described the imports as a temporary measure until refinery output recovers and development projects are finished.

Prime Minister Mohammed Shia al-Sudani directed the ministry to stop importing middle distillates in November 2025, citing higher crude output and added refining capacity. Iraq continued to buy high-octane gasoline and low-sulphur diesel grades its refineries cannot produce to European specification.

Iraq has nameplate refining capacity of roughly 1.3mn barrels a day, the second largest in the Arab world after Saudi Arabia, and has added 380,000 b/d since early 2023, including the 140,000 b/d Karbala refinery. The configuration remains the problem. Iraqi refineries yield heavy fuel oil in excess of domestic requirements and insufficient gasoline and diesel.

The system was already under strain. A nationwide gasoline shortage in June followed the withdrawal on security grounds of the foreign contractor building a fluid catalytic cracking unit at the South Refineries, costing 4mn to 5mn litres a day of high-octane gasoline. Demand reached about 35mn litres a day against output of roughly 30mn litres. Several foreign oil companies pulled out or curtailed operations in Iraq after Iranian missile and drone attacks during the conflict with the US and Israel.

Generator demand is the second pressure. Iraq has imported Iranian gas since 2017 to fuel power plants near Baghdad and Basra, under a five-year contract renewed in March 2024 for up to about 18.7 bcm a year. Actual deliveries have run well below contracted volumes, and Iran has cut supply during periods of peak demand at home.

The Kurdistan Region has faced its own petrol shortage over the past week. Kurdistan Regional Government Prime Minister Masrour Barzani linked the disruption partly to regional tensions and higher global fuel prices, while production costs had held steady, and said the wider energy market had affected both the region and Iraq.

Baghdad sells fuel at among the lowest pump prices in the world whilst Iranian imports in recent months, which are even cheaper due to the devalued rial have often been popular in border regions with smugglers on motorcycles.