Washington has declined to renew a sanctions waiver that allowed Iraq to buy electricity from neighbouring Iran, a spokesperson for the American embassy in Baghdad said on Sunday.
Despite having immense oil and gas reserves, Iraq remains dependent on imports to meet its energy needs, and Iran supplies a third of the country's gas and electricity.
The Baghdad government, which hopes to achieve energy self-sufficiency by 2028, said it had prepared "for all scenarios" regarding the waiver.