Iraq Situation Report: May 20-26

Key Takeaway: Prime Minister Mustafa al-Kadhimi is seeking to develop closer energy relationships with Iraq’s Gulf neighbors, particularly Saudi Arabia, to demonstrate to the United States that Iraq is making progress in divesting from Iranian energy reliance and renewing relations with all of its neighbors before the June US-Iraq Strategic Dialogue. Delegations to Saudi Arabia and Kuwait likely secured new investments in Iraqi energy infrastructure that will enable some divestment from Iranian energy imports. Saudi Arabia and Kuwait also reportedly agreed to reduce their own oil production to allow Iraq to produce quantities above those established by the Organization of the Petroleum Exporting Countries, potentially averting another hit to Iraq's already depressed government revenues.  Immediately after the delegation to Saudi Arabia, Iranian proxy militias issued statements condemning Saudi Arabia as a source of terrorism in Iraq and promising vengeance. Iran will likely attempt to prevent energy divestment; Iraqi imports of Iranian energy are a key economic driver for Iran.