Despite its immense oil and gas reserves, Iraq remains dependent on imports to meet its energy needs, and Iran supplies a third of the gas and electricity consumed there.

"On March 8, the U.S. Department of State did not renew the waiver for Iraq to purchase Iranian electricity," the embassy spokesperson said, adding that the decision "ensures we do not allow Iran any degree of economic or financial relief".

The statement did not mention Iranian gas imports, which are crucial for Iraq's domestic electricity generation.

The waiver was introduced in 2018, when Washington reimposed sanctions on Tehran after Trump abandoned a nuclear deal with Iran during his first term in office.

Since returning to the White House in January, Trump has reinstated his "maximum pressure" policy against Iran.

"The President's maximum pressure campaign is designed to end Iran's nuclear threat, curtail its ballistic missile program, and stop it from supporting terrorist groups," the embassy spokesperson said.

Calling Iran "an unreliable energy supplier", the spokesperson urged Baghdad "to eliminate its dependence on Iranian sources of energy as soon as possible".

Iraqi government spokesman Bassem al-Awadi told state media Saturday that authorities had prepared "for all scenarios" regarding the waiver.

Baghdad has repeatedly stressed the need to diversify energy sources to reduce its dependence on Iran and to ease Iraq's chronic power outages, especially during summer.