The United States has granted Iraq another 90-day waiver to continue with vital energy imports from neighbouring Iran despite re-imposed sanctions, a government source said Saturday.
The extension came after "long discussions" with Washington ahead of a looming deadline on a previous extension granted in December, the official, close to the negotiations, told AFP on condition of anonymity.
The talks came amid spiking tensions between Iraq's two closest allies -- the US and Iran -- following a twin attack on tankers in the Gulf that US President Donald Trump has blamed on Tehran.
Iranian energy imports are vital to Iraq, one of the world's hottest countries, which faces chronic blackouts that often leave homes without power for up to 20 hours a day.
Summer temperatures in Baghdad are already topping seasonal averages, boosting electricity consumption and raising fears of a repeat of last summer's mass protests over power outages.
To compensate, Iraq pipes in up to 28 million cubic metres of Iranian gas a day for power generation and also directly imports up to 1,300 megawatts of Iranian electricity.
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That dependence is uncomfortable for Washington, which sees Tehran as its top regional foe.
Trump reimposed crippling unilateral sanctions on Iran's energy and finance sectors in November following a decision to abandon a landmark 2015 nuclear deal between major powers and Tehran.
He gave Iraq an initial 45-day waiver to continue buying electricity and natural gas from Tehran, and in December Washington granted Baghdad an 90-day extension.