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

Iraq Lubricants Market Analysis

The Iraq Lubricants Market size is estimated at 296.83 million liters in 2025, and is expected to reach 340.12 million liters by 2030, at a CAGR of 2.76% during the forecast period (2025-2030).

The Iraq lubricants industry is experiencing a significant transformation driven by technological advancements and changing consumer preferences. The automotive sector witnessed an impressive 18.4% surge in sales during 2023, adding approximately 128,000 new vehicles to the market, with prominent brands like Kia, Toyota, Hyundai, and MG dominating the personal car segment. This shift is accompanied by evolving automotive engine designs, featuring enhanced functionality and higher tension components, necessitating superior lubricants capable of withstanding increased RPMs and temperatures. The industry is also witnessing a growing emphasis on research and development for innovative specialty lubricants solutions to meet these evolving requirements.

The market is undergoing a notable transition toward sustainable and environmentally conscious solutions. By 2026, electric vehicles are projected to capture 23% of the market share, with hybrids following at 4%, signaling a significant shift in lubricant requirements. This transformation is further evidenced by the Defense Industries Commission's plans to establish Iraq's inaugural electric vehicle factory by the end of 2024, complete with specialized charging infrastructure. The industry is responding by developing specialized industrial lubricants for electric and hybrid vehicles, focusing on properties like enhanced thermal stability and electrical conductivity.

Iraq's renewable energy sector is emerging as a significant driver for specialized industrial lubricants. The country possesses substantial wind energy potential, exceeding 5,000 megawatts, with regions like Basrah, Amara, and Hai recording peak wind speeds of 5.9 m/s, 5.5 m/s, and 5.3 m/s respectively in June. The Kurdistan Regional Government is actively pursuing wind energy development, conducting feasibility studies across its northern provinces, including Dohuk, Erbil, and Sulaimaniya. This expansion in renewable energy infrastructure is creating new demands for specialized turbine oil designed for wind turbines and other renewable energy equipment.

The construction and infrastructure sector is playing a pivotal role in shaping lubricant demand. In 2023, Iraq's construction industry expanded by 5.5% compared to the previous year, with the government allocating approximately USD 42 billion in its 2024 budget for infrastructure initiatives, encompassing over 6,500 projects nationwide. Notable developments include the strategic Development Road project, a USD 17 billion venture linking the Grand Faw Port to Turkey's border, featuring a 1,200-kilometer high-speed rail network. These large-scale infrastructure projects are driving demand for specialized construction equipment lubricants, particularly those designed for heavy machinery operating in challenging conditions, including hydraulic fluid solutions.

Iraq Lubricants Market Trends

Increasing Consumption in Automotive Sector

The automotive sector's robust expansion in Iraq has emerged as a primary driver for automotive lubricants demand, with applications spanning gearboxes, transmissions, commercial vehicles, motorcycles, and passenger cars. The market witnessed an impressive surge in 2023, with approximately 128,000 new vehicles added compared to the previous year, representing an 18.4% increase in sales. This growth is underpinned by rising per capita income, an expanding middle class, and limited public transport options, with prominent brands like Kia, Toyota, Hyundai, and MG dominating the personal car segment. The automotive landscape has been further enriched by strategic initiatives, such as the General Company for the Automotive Industry in Iraq setting ambitious targets of producing around 4,000 cars and 400 trucks annually, while the Kurdistan Region Ministry of Trade and Industry announced the establishment of an auto manufacturing plant in the Kurdistan region in 2024.

Recent technological advancements in automotive engine design have significantly influenced engine oil requirements. Modern engines are subjected to higher tension and heat, particularly with the rise of high-RPM engines, necessitating superior lubricant formulations. Transmission systems have evolved to enable vehicles to reach speeds of up to 150 miles per hour, accompanied by improvements in gear and bearing technologies that demand advanced transmission fluid. This technological progression has spurred market players to invest in research and development for innovative solutions. Additionally, there is a growing emphasis on consumer education, with market players and mechanics actively informing consumers about the importance of using appropriate motor oil to reduce wear, extend engine and equipment life, prevent corrosion and oxidation, and ensure thermal stability in internal components.

Increasing Investments in Public and Private Construction Projects

Iraq's construction sector has witnessed substantial growth through significant public and private investments, with the government earmarking approximately USD 42 billion in its 2024 budget for infrastructure development, encompassing over 6,500 initiatives nationwide. A landmark project announced in February 2024 is the Development Road, a USD 17 billion venture that will connect the Grand Faw Port in Southern Iraq to Turkey's border, featuring a 1,200-kilometer two-way high-speed rail network designed for speeds up to 300 kilometers per hour. This ambitious project includes 15 train stations along with extensive highway and tunnel development. Additionally, the Baghdad subway project has been unveiled, planning seven lines spanning 148 kilometers with a daily capacity of 1 million passengers, supported by four maintenance depots and substantial parking facilities at main stations.

The construction sector's growth is further evidenced by significant international collaborations and investments. In February 2022, Iraq's housing ministries secured three major contracts worth USD 450 million with Egyptian firms for housing projects, followed by a 2024 agreement with Egypt's Ora Developers Group to construct 100,000 housing units. The United Nations Development Program (UNDP) and Japan International Cooperation Agency (JICA) have also partnered with Iraq to accelerate socio-economic infrastructure projects, supported by JICA's financial backing. These developments, coupled with the construction of combined cycle power plants, expansion of the Baghdad Metro, and upgrades to airports in Nasiriyah and Mosul, have significantly increased the demand for construction equipment and, consequently, the consumption of machinery lubricants used in heavy machinery operations. The rise in infrastructure projects has also spurred the need for industrial fluids to maintain and enhance the efficiency of construction machinery.

Segment Analysis: By Product Type

Engine Oil Segment in Iraq Lubricants Market

Engine oil dominates the Iraq lubricants market, commanding approximately 62% of the total market volume in 2024. This substantial market share is primarily driven by the high engine oil consumption capacity of passenger vehicles (SUVs and sedans) and commercial vehicles. The segment's prominence is further reinforced by the increasing vehicle population in Iraq, with a notable 18.4% surge in automotive sales during 2023. Leading automotive brands like Kia, Toyota, Hyundai, and MG have significantly contributed to this growth, particularly in the personal car segment. The rising per capita income, expanding middle class, and limited public transport options have collectively stimulated the demand for engine oils in the country.

Transmission and Hydraulic Fluid Segment in Iraq Lubricants Market

The transmission and hydraulic fluid segment is projected to exhibit the highest growth rate of approximately 3.2% during the forecast period 2024-2029. This growth is primarily attributed to the increasing penetration of vehicles equipped with automatic transmissions in Iraq. The segment's expansion is further supported by the rising demand from various industrial sectors, particularly in mining and construction equipment. The Iraqi government's substantial infrastructure investments, including the USD 42 billion allocated in its 2024 budget for various projects, are expected to drive the demand for transmission and hydraulic fluids in construction and earthmoving equipment.

Remaining Segments in Product Type

The other segments in the Iraq lubricants market include general industrial oil, gear oil, grease, and other product types, each serving specific industrial and automotive applications. General industrial oil plays a crucial role in manufacturing and processing industries, while gear oil is essential for automotive and industrial gear systems. The grease segment caters to various applications in automotive, industrial, and marine sectors, offering specialized solutions for different operating conditions. Other product types, including metalworking fluids, process oils, and specialty lubricants, contribute to the market's diversity by meeting specific industry requirements and technological advancements.

Segment Analysis: End-User Industry

Automotive and Transportation Segment in Iraq Lubricants Market

The automotive and transportation segment dominates the Iraq lubricants market, commanding approximately 57% of the total market volume in 2024. This substantial market share is primarily driven by the high engine oil consumption capacity of passenger vehicles (SUVs and sedans) and commercial vehicles. The segment's dominance is further reinforced by Iraq's impressive 18.4% surge in automobile sales in 2023, adding approximately 128 thousand new vehicles compared to the previous year. Notable brands like Kia, Toyota, Hyundai, and MG maintain a strong presence in the personal car segment, supported by rising per capita income, an expanding middle class, and limited public transport options. The segment's growth is also bolstered by advancements in automotive engine designs, which subject internal components to higher tension and heat, necessitating superior automotive fluids. Additionally, improvements in transmission systems enabling vehicles to reach speeds of up to 150 miles per hour have created increased demand for high-performance lubricants.

Power Generation Segment in Iraq Lubricants Market

The power generation segment is projected to exhibit the highest growth rate of approximately 5% during the forecast period 2024-2029. This accelerated growth is primarily attributed to the projected increase in consumption at upcoming and existing wind power plants in the country. The sector's expansion is particularly evident in the Kurdistan Region, where feasibility studies for wind farms across northern provinces, including Dohuk, Erbil, and Sulaimaniya, are actively being pursued. The growth is further supported by Iraq's ambitious renewable energy targets, including plans to add a gigawatt of wind energy capacity by 2028. Additionally, recent developments like the collaboration between Iraqi Electricity Minister Ziyad Ali Fadel and Siemens Energy in March 2024, focusing on converting flared gas into electricity, indicate a strong trajectory for the power generation sector's lubricant requirements.

Remaining Segments in End-User Industry

The heavy equipment segment maintains a significant presence in the market, driven by extensive construction activities and infrastructure development projects across Iraq. The food and beverage sector, while smaller in market share, demonstrates steady demand for specialized food-grade lubricants in processing and packaging operations. Other end-user industries, including manufacturing, mining, and general industrial applications, collectively represent a substantial portion of the market, contributing to the overall market dynamics through diverse application requirements and specialized lubricant needs. These segments are particularly influenced by Iraq's ongoing industrial development initiatives and the government's push toward economic diversification beyond the oil sector.