As the conflict centered on Iran widens, old sectarian fault lines in Iraq — which nearly sparked civil war two decades ago — are re-emerging, residents say. Tensions are visible on social media and on the streets of southern cities such as Basra, where many fear the confrontation will redraw political and social balances at home.
“A segment of the Shiite community sees this as existential,” said Wissam Yassin, a digital marketer in Basra, describing how some view attacks on Iran as attacks on their own political standing in Iraq. He added that many Sunnis regard the turmoil as an opportunity to reshape the country’s political landscape as Tehran’s influence wanes — a split he called Iraq’s gravest danger.
Iraqi journalist Kamal Alaash warned on social platforms that the consequences could be enormous: he suggested that the upheaval following any extreme outcome in Iran could dwarf the post-Saddam transition, with regional borders and politics altered in ways that would deeply affect Iraq.
The two neighbors are tightly bound. Iran and Iraq share roughly 1,500 kilometers of border and extensive commercial, political and military connections. Iraq has already been hit by strikes tied to the wider confrontation: after U.S. and Israeli attacks on Iranian targets, Tehran struck U.S. bases across the region; Iranian-aligned militias in Iraq moved to hit American positions, and U.S. or Israeli strikes have targeted Iran-affiliated groups inside Iraq.
Renad Mansour, director of the Iraq Initiative at Chatham House, said Tehran may try to keep the conflict simmering to exploit limited U.S. appetite for escalation and to raise political costs for Washington — costs Iraq is likely to absorb.
Beyond violence, the war threatens major economic disruption. Bilateral trade reached about $12 billion in 2024, with Iran supplying roughly a fifth of Iraq’s consumer goods and serving as a channel to access foreign currency and evade sanctions. Iran is also a key energy partner: in 2023, Iranian gas supplied about 29% of Iraq’s electricity generation, according to the Clingendael Institute. That reliance stokes fears ahead of another hot summer when power and water shortages quickly spark public anger. In Iraqi Kurdistan, the Khor Mor energy complex — a major local power source run by a UAE firm — was shut to protect staff.
If instability in Iran deepens, supply lines and energy deliveries could be disrupted. Iraq’s economy depends heavily on oil revenues; any blockade or interruption of tanker traffic through the Strait of Hormuz could sharply reduce state income and undermine the government’s ability to pay public-sector wages and benefits to roughly seven million people. Iraq previously saw unrest in 2020 when falling oil prices delayed salaries during the COVID-19 shock.
Politically, Tehran wields significant influence in Iraq through Shiite parties and militias. Baghdad is in the delicate process of forming a new government after the November 2025 elections, a phase typically dominated by factional bargaining. Negotiations recently stalled over the choice of prime minister, and the U.S. publicly criticized the candidacy of former prime minister Nouri al-Maliki as too close to Iran. Mansour warned that the conflict could shape the government-formation process in many ways — from delays to the possible imposition of an emergency administration.
Some Iraqis see potential upside if Iranian interference falls. Mohammed Anouz, a lawyer and former parliamentarian, said foreign meddling has long undercut Iraqi independence. Victoria Taylor of the Atlantic Council’s Iraq Initiative argued that reduced Iranian meddling might let Baghdad reclaim sovereignty, deepen ties with Western and regional partners, and curb Tehran’s political levers in Iraq.
But independent researcher Hamzeh Hadad cautioned that while Iraqis are adept at short-term adaptation, prolonged regional war would likely intensify instability. Any transition inside Iran could spill across the border without delivering immediate benefits to Iraq.
“Some may view change as positive,” Mansour said, “but nobody knows what comes next. History suggests more chaos and violence are likely before stability returns, and that prospect worries many Iraqis.”
On the ground, Baghdad, Erbil and other airports and bases have been struck in incidents linked to the wider confrontation, including sites hosting U.S. facilities. Those attacks have raised fears that Iraq could become a more open battleground if the Iran conflict continues to escalate.