Drone strike on Iraq gas field knocks out most of Kurdistan's power

The immediate effect is limited to the region. Khor Mor's gas is used for power generation in Kurdistan, not for export, so global crude and LNG markets are largely unaffected. For oil markets, the broader implication is that energy infrastructure in the area remains vulnerable even as diplomatic efforts appear to gain momentum. This bolsters the war-risk premium in crude and undermines the de-escalatory tone of Trump's recent statements. Traders will monitor for any confirmation of Iranian involvement or a US response that could reignite escalation risks around Gulf shipping lanes.

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Earlier:

• Weekend: Trump says new Iran strikes ‘highly unlikely’ five times (but three carriers stay ready)

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Just hours after Trump stated that renewed US strikes on Iran were improbable, a suspected Iranian drone knocked out the majority of Kurdistan's power supply, signaling that regional energy infrastructure remains a target regardless of the diplomatic climate.

Summary:

• A drone strike on Sunday evening targeted a gas storage facility at Iraq's Khor Mor gas field, bringing production to a halt.
• The Kurdistan region saw nearly 2.8 gigawatts of generation capacity lost, about two-thirds of its normal electricity supply.
• No group has claimed the attack. Iran or its allied Iraqi militias are under suspicion.
• The incident occurred hours after Trump said further US military action against Iran was highly unlikely if talks continue.
• The field serves regional power generation, not exports, so the global supply impact is minimal.
• Washington is separately urging Iraq to close all but two of its border crossings with Iran.

A drone suspected to be from Iran has stopped production at Iraq's Khor Mor gas field, one of the largest in Kurdistan. It removed nearly 2.8 gigawatts of power generation, representing a notable escalation in the regional fallout from the Iran conflict.

Two security sources told Reuters that a drone struck the field on Sunday evening, with smoke seen rising from the site in Chamchamal, Sulaymaniyah province. An engineer at the field reported that a gas storage facility was hit, and all personnel were instructed to take shelter out of fear of additional attacks.

The Kurdistan region's electricity ministry reported that nearly 2.8 gigawatts of generating capacity was disconnected from the grid. Since the region typically produces around 4 gigawatts, that means about two-thirds of its power supply was knocked offline, leaving homes and businesses facing blackouts.

No one has claimed responsibility. Suspicion points to Iran or its Iraqi militia allies, which have launched repeated missile and drone strikes on the Kurdistan region since the war began. Kurdish officials have long blamed Iran-backed armed groups for attacks on Khor Mor. The field has been targeted multiple times in recent years, including an attack in November last year that also halted production.

The timing is notable. The strike came just hours after US President Donald Trump said renewed US military action against Iran was highly unlikely as long as talks on Tehran's nuclear programme and the Strait of Hormuz advance. If Iran is confirmed to be involved, the attack would indicate that Tehran or its proxies remain willing to hit regional energy infrastructure even as diplomatic contacts intensify.

Pearl Petroleum, a consortium that includes UAE-based Dana Gas and Crescent Petroleum, operates Khor Mor. Its gas powers plants in the Kurdistan region rather than export markets, so the direct impact on global supply is limited.

Pressure on Iraq is also mounting from Washington. Iraq's foreign minister said the US Treasury has asked Baghdad to close all but two of its border crossings with Iran, part of a broader effort to tighten economic pressure on Tehran.

Focus now turns to how quickly production can be restored, whether responsibility is officially attributed, and how Washington responds to an attack that contradicts its message of restraint.