As collaboration between Iran and Iraq on oil field development continues, experts are highlighting the significant challenges posed by sanctions in the process.

Energy analyst Morteza Behrouzifar highlighted that it would harm Iraq to continue with the project. “Iraq currently enjoys access to global facilities, financial resources, and major international companies, whereas Iran faces limitations due to sanctions,” he said amid Iran's sanctions for its nuclear program, human rights abuses and support of Russia's war on Ukraine.

He noted that Iran's restricted access to global facilities, financial resources, and major international companies due to sanctions severely impedes progress.

A major deal was signed with Iraq last week to develop six oil fields in the south and west of the country, just a week after entering into $20bn contracts to boost pressure in the South Pars gas field.

According to Shana News Agency, the upstream deals with local private firms, worth more than $13bn in investment, are aimed at expanding Iran’s crude output, which stands at 3.45mn barrels per day.

The oil fields include Azadegan and Masjed Soleyman in southern Khuzestan province, Azar in western Ilam province, and Sumar, Saman, and Delavaran in western Kermanshah province.

Oil Minister Javad Owji said the contracts would add up to 400,000 more barrels to Iran’s daily crude output.

Meanwhile, recent developments in Iran's oil industry have raised questions about domestic capabilities. The Iranian oil ministry's $11.5 billion contract with 11 domestic firms, spearheaded by Advand Azadegan Company, has drawn scrutiny due to the latter's limited track record in oil exploration and extraction.

Iran's oil industry is in the midst of a crisis as approximately 80% of its active oil fields are in the latter stages of their life cycle, experiencing productivity declines. To mitigate this, Iran requires substantial gas injection, but shortages hamper efforts, with only a fraction of the required volume being injected daily.