Iraq Lubricants Market Size & Share Analysis - Growth Trends And Forecast (2025 - 2030)

Iraq Lubricants Market Trends and Insights

Increased Automotive Parc and Aging Vehicles

Iraq’s vehicle import bill touched USD 712.5 million in 2024^{[1]Shafaaq News, “Kia surges ahead as Iraq's auto market hits $700M in Japanese imports,” shafaq.com}. Yet the average odometer still sits above 100,000 km, requiring shorter drain intervals that inflate lubricant consumption. High-viscosity engine oil grades, therefore, remain indispensable for drivers facing dusty roads and temperature extremes. The International Monetary Fund’s 4.1% GDP growth outlook for 2025 underpins continued vehicle acquisitions, keeping aftermarket sales volumes high. This trend reinforces premium pricing power, which counterbalances modest volume gains and protects margins for branded suppliers.

Reconstruction-Led Surge in Diesel Genset Usage

Electric-power shortfalls persist even after record generation in 2024, forcing retail, commercial, and industrial users to operate diesel generators throughout peak load hours^{[2]GE Vernova, “More Reliable, Sustainable Electricity in Iraq,” gevernova.com} . The Besmaya plant’s Phase 2 upgrade, scheduled online in summer 2025, will ease but not erase the deficit, preserving a lucrative niche for heavy-duty diesel engine oils. Construction of the USD 17 billion Development Road logistics corridor also relies on gensets during early civil-works phases, extending demand at least until 2027. This dynamic creates seasonal pricing spikes that suppliers with strong local inventory can exploit.

Up-Scaling of Upstream and Mid-Stream Oil Projects

BP’s USD 25 billion Kirkuk redevelopment aims for 210,000 bpd plateau output and demands high-performance hydraulic fluids and gear oils for drilling operations. TotalEnergies is adding early-gas treatment units to curb flaring, a move that also boosts demand for temperature-resistant synthetic grades across rotating equipment. Iraq’s ambition to surpass 6 million bpd by 2029 entrenches a multiyear lubricant pull-through effect that is largely insulated from tariff shocks because most project contracts are denominated in USD and locked into long-term service pacts.

OEM Service-Fill Partnerships (Shell, TotalEnergies)

Exclusive supply contracts between global OEMs and lubricant majors reshape distribution. TotalEnergies’ centennial presence translates into factory-fill mandates for new heavy equipment, ensuring off-take volumes that bypass smaller distributors. Shell’s agreement with GB Auto in 2023 established a similar model in central and southern Iraq, reinforcing brand loyalty through bundled maintenance packages. Such deals embed specific lubricant specifications inside warranty conditions, shifting purchase decisions away from price and toward OEM approval lists.

Geopolitical Instability and Sanctions Risk

The U.S. Treasury’s tightened scrutiny of Iraqi banking channels and an announced 30% tariff on Iraqi products effective August 2025 strain import cash flows and deter advance stockpiling. Logistics corridors through Kurdistan face intermittent disruption after attacks on critical infrastructure shaved 140,000-150,000 bpd from local crude flows in July 2025. Currency depreciation across neighboring economies adds further volatility as suppliers hedge dinar exposure. High-value synthetic imports are particularly vulnerable, forcing distributors to widen price bands or shift buyers toward locally blended mineral alternatives.

Increasing EV and Hybrid Imports

Battery-electric and hybrid vehicles captured 3% of new registrations but posted 41.6% growth in early 2025, laying the groundwork for the gradual erosion of engine oil volumes. Urban charging initiatives in Baghdad and Basra encourage early adopters, while anticipated subsidies—funded by crude export receipts—could accelerate penetration beyond 2030. Hybrids still require lubricants, although at longer intervals, and pure EVs primarily need gear oils for reduction gears, meaning total addressable liters decline in the long term. For now, EV volumes remain too small to dent overall Iraq lubricants market growth, but planners must prepare for steeper declines post-2030.

Segment Analysis

By Product Type: Engine Oils Drive Volume Growth

Engine oils maintained a 61.84% share of the Iraq lubricants market size in 2024, thanks to a dominant passenger-car parc and severe operating conditions that hasten oil degradation. Drain intervals average every 4,000-5,000 km, well below global norms, amplifying per-vehicle consumption. Transmission and hydraulic fluids deliver the fastest 3.21% CAGR as the Development Road megaproject, oilfield expansions, and port construction deploy thousands of cranes, excavators, and hydraulic presses that mandate specialized fluids. 

General industrial oils rise in tandem with light-manufacturing investments, while gear oils support fleet expansion across regional haulage corridors. Premium marine greases find a niche at the Al-Faw Grand Port, where saltwater corrosion necessitates high-performance additives. Adoption of bio-based lubricants for environmentally sensitive settings gains traction in the food-processing and marine segments, although volumes remain small.

Note: Segment shares of all individual segments available upon report purchase

By End-User Industry: Automotive Leads, Power Generation Accelerates

Automotive and transportation captured a 57.07% share of the Iraq lubricants market in 2024. Logistics firms expanding regional truck fleets for construction material haulage further inflate consumption. On-road diesel applications favor high-TBN formulations that handle elevated sulfur in domestic fuel. Power generation emerges as the fastest-expanding end-user with a 4.66% CAGR through 2030, propelled by widespread genset adoption as well as turbine maintenance schedules tied to gas-processing plants built under TotalEnergies and other IOC agreements. 

Heavy equipment lubricants ride the same infrastructure wave, covering excavators, drilling rigs, and material handlers tied to oilfield upgrades and port dredging. Food and beverage processing, though still a minor slice, shows above-average growth as ISO 21469 rules drive uptake of NSF H-1 food-grade lubricants at new flour mills and bottling lines.

Note: Segment shares of all individual segments available upon report purchase

Geography Analysis

Baghdad and its environs account for the lion’s share of Iraq's lubricants market due to dense population and the country’s principal automotive retail hub. Basra, anchored by TotalEnergies’ USD 10 billion Gas Growth Integrated Project, is the fastest-growing hub; associated refinery, petrochemical, and port expansions create stable industrial coolant and gear oil demand. 

Kurdistan exhibits relatively higher synthetic uptake driven by closer commercial ties to Turkey and better-developed retail chains, yet supply routes remain vulnerable to pipeline outages and security incidents. Central Iraq benefits from agricultural mechanization programs that raise tractor lubricant demand, while western provinces lag because continued security challenges deter substantial capital inflows.

Cross-border logistics affect pricing: proximity to Kuwaiti refineries lowers landed costs for southern distributors, whereas pipelines from Iran supply northern blenders with base oils. The suspension of the Kirkuk-Ceyhan pipeline since 2023 shifted crude flows southward, re-routing lubricant bases and causing temporary shortages until trucking networks adapted.