California Helps Iraq Claim Top Spot Among OPEC Crude Oil Suppliers to the United States

Energy Dominance is not possible without fixing California.

In a surprising shift in global energy dynamics, Iraq has emerged as the leading OPEC crude oil supplier to the United States in May 2025, exporting nearly 7 million barrels to U.S. refiners. This milestone, driven by robust U.S. demand for heavier Middle Eastern crude grades and Iraq’s ability to capitalize on market opportunities, is partly a consequence of California’s restrictive energy policies under Governor Gavin Newsom.

These policies, which have led to a significant reduction in domestic oil production and refinery closures, are increasingly viewed as a national security risk, inadvertently increasing reliance on foreign oil and empowering OPEC producers, such as Iraq.

Yesterday, on the Energy News website, I wrote “California is a National Security Risk, Funding the Ukrainian/Russian War, and Closing Refineries in California.”

This article highlights that California is importing gasoline and diesel from India, which is purchasing Russian oil that has been sanctioned. You can not make this kind of hypocrisy up.

And the Day before: California to Examine Amazon Oil Ties Following Pleas from Ecuador’s Indigenous Leaders: A Closer Look at Newsom’s Energy Choices

This is nuts. The oil California imports from Ecuador is harming the rainforest, often through Chinese-operated companies.

And also on the 29th: California is a U.S. National Security Risk, and the Gas and Diesel Crisis Was Manufactured. This article provides more details about the closures and security risks.

Iraq’s Rise to the Top

According to data from the U.S. Energy Information Administration (EIA), Iraq surpassed other OPEC members, including Nigeria (6.803 million barrels) and Saudi Arabia (6.208 million barrels), to become the top OPEC crude supplier to the U.S. in May. Iraqi exports averaged between 160,000 and 190,000 barrels per day (bpd), marking the country’s highest monthly volume to the U.S. this year.

This surge aligns with Iraq’s efforts to compensate for past overproduction under OPEC+ agreements, alongside sustained U.S. appetite for its heavier crude grades amid moderating domestic shale growth.

Iraq’s fiscal stability heavily depends on oil, with crude sales accounting for roughly 90% of its state revenue. The recent price support near $80 per barrel has bolstered Baghdad’s ability to finance public sector wages and infrastructure projects, further incentivizing high export volumes.

As OPEC+ maintains voluntary output curbs, Iraq has solidified its position among the top five crude suppliers to the U.S., filling a gap left by declining domestic production in states like California.

California’s Energy Policies: A National Security Concern

California, once a significant oil-producing state, has seen its domestic output plummet due to Governor Newsom’s aggressive environmental policies. Since 2019, Newsom’s administration has idled or closed four refineries, with a potential fifth closure looming in 2026, resulting in a 56% drop in California’s oil production.

This has forced the state to rely heavily on imported oil, much of which now comes from OPEC nations like Iraq.

Michael and I have previously highlighted on The Energy News Beat podcast how these policies not only increase California’s dependence on foreign oil but also pose a national security risk. By reducing domestic refining capacity, California has become a weak link in the U.S. energy supply chain, vulnerable to global disruptions.

The state’s high gasoline prices—exacerbated by a projected 65-cent increase due to reduced local production—reflect the economic fallout of these decisions. Moreover, the reliance on imported oil indirectly funnels revenue to geopolitically sensitive regions, including those entangled in conflicts like the Russia-Ukraine war, as funds from oil purchases can bolster regimes or proxies involved in global instability.

Critics argue that Newsom’s push for renewable energy, while environmentally motivated, has outpaced the state’s ability to maintain energy security. The closure of refineries, coupled with stringent regulations, has deterred investment in California’s oil sector, driving production overseas. This shift has directly contributed to Iraq’s ability to capture a larger share of the U.S. market, as refiners seek stable supplies of heavy crude to replace dwindling local sources.

Source: Nathan Hammer’s Substack

Geopolitical and Economic Implications

The interplay between California’s energy policies and Iraq’s export surge underscores broader geopolitical and economic challenges. The U.S., despite achieving a record crude oil production of 13.24 million bpd in April 2025, faces constraints in meeting its refining needs due to regional disparities in production and capacity. California’s reduced output has amplified the need for imports, empowering OPEC producers at a time when global energy markets are fraught with tension.

For Iraq, the increased exports provide critical fiscal relief, but they also highlight the U.S.’s growing vulnerability to supply chain disruptions. The Strait of Hormuz, through which much of Iraq’s oil passes, remains a global chokepoint, with over 20 million barrels of crude—about 20% of daily global consumption—transiting daily. Recent escalations in the Middle East, including U.S. strikes on Iranian nuclear facilities and Iran’s retaliatory actions, underscore the fragility of this route. A disruption could spike Brent crude prices to $100-$130 per barrel, severely impacting U.S. consumers and industries.

Furthermore, California’s policies have ripple effects beyond its borders. By ceding market share to OPEC, the U.S. risks losing leverage in global energy negotiations. The Energy News Beat has reported that California’s actions indirectly support adversarial regimes, as oil revenues can fund military activities or proxies in conflicts like Ukraine-Russia. This dynamic raises questions about the balance between environmental goals and energy independence, a debate that will likely intensify as the U.S. navigates its energy future.

A Call for Strategic Energy Policy

As Iraq cements its role as a key U.S. oil supplier, the unintended consequences of California’s energy policies demand scrutiny. Governor Newsom’s focus on renewables must be paired with a pragmatic approach to maintaining domestic production and refining capacity to safeguard national security. The U.S. cannot afford to rely on geopolitically volatile regions for its energy needs, particularly when domestic resources remain viable.

To address this, policymakers should consider incentives for maintaining and modernizing U.S. refineries, streamline regulations to encourage domestic production, and invest in infrastructure to reduce reliance on critical chokepoints, such as the Strait of Hormuz. Security is essential to prevent further erosion of U.S. energy independence.

The Bottom Line

Iraq’s ascent to the top spot among OPEC crude oil suppliers to the U.S. is a testament to its strategic export push and the unintended consequences of California’s energy policies. Governor Newsom’s refinery closures and production cuts have not only driven up local gas prices but also increased U.S. dependence on foreign oil, posing a national security risk.

I have said this before, Secretary Chris Wright is doing a fantastic job and is trying to deliver on all of President Trump’s huge energy agenda. But we are about to hit a massive energy crisis called “Newsom’s Energy Policies.” Newsom’s failure will be a huge black eye on the Trump Administration's economy. This is an all-hands-on-deck moment as California is set to lose another 20% of its refining capacity next year, and it has only issued a few permits this year for drilling in the state. A state that was once energy independent.

So in a single week by Wednesday, we are writing about:

• California is purchasing Russian oil that has been shipped to India for refining.

• Diesel and gasoline are imported from India.

• Importing oil from Iraq, enough to put them at the top of the OPEC suppliers to the U.S.

• California is contributing to the destruction of the rainforest by purchasing oil from Ecuador and Chinese companies.

Secretary Wright needs all the help we can give him to garner support for overturning the State rules and regulations. In this case, the U.S. Military depends on those refineries for jet fuel, gasoline, and diesel.

I can not believe that I am about to say this. The United States may have to take control of the refineries and use them for military purposes, and remove them from the power of the State of California. I am going to do some research on the legalities, but the War Powers Act allows for a lot of flexibility.

Energy Dominance is not possible without fixing California.

As global energy markets remain volatile, the U.S. must reassess its energy strategy to ensure resilience and independence, lest it continue to empower OPEC producers, such as Iraq, at the expense of its security.

I am also going to reach out to a fellow Substack author,

Tuco's Child

, and discuss some collaborative writing, as well as an interview on the Energy News Beat podcast, since he is providing valuable information on California as a National Security Risk.

Sources: OilPrice.com, Energy News Beat, Nathan Hammer’s Substack, and X Posts