Sanctions pressure rises as U.S. targets alleged Iraq-Iran oil smuggling operations

Rashmi Pandey — Thu, 07 May 2026 14:38:55 +0000

The United States Department of the Treasury is preparing sanctions against Iraqi Deputy Oil Minister Ali Maarij Al-Bahadly over allegations that he facilitated Iranian oil sales in violation of existing U.S. sanctions, according to officials familiar with the matter.

U.S. authorities allege that Al-Bahadly played a role in enabling large-scale diversion of Iraqi crude and helped conceal Iranian-origin oil by blending it with Iraqi supplies before shipment through regional trading networks. The accusations form part of Washington’s broader efforts to tighten enforcement against Iran’s oil exports amid ongoing geopolitical tensions in the region.

Officials claim the alleged operations allowed Iranian crude to enter international markets under the label of Iraqi oil, helping Tehran bypass restrictions imposed by the United States on its energy sector.

The planned action would mark one of the rare instances in which Washington directly sanctions a serving senior Iraqi government official, underlining growing U.S. concerns over economic and energy links between Iraq and Iran.

The development also reflects increasing scrutiny of regional oil trade routes as the U.S. intensifies pressure on networks accused of assisting Iranian exports. Energy markets and shipping channels across the Gulf region have remained under close watch amid continuing tensions linked to sanctions enforcement and maritime security.

Neither the Iraqi Oil Ministry nor Al-Bahadly immediately issued a public response to the reported sanctions move.

The United States has repeatedly stated that it aims to curb Iran’s oil revenues, arguing that proceeds from energy exports help fund activities viewed by Washington as destabilising in the region. Tehran has consistently rejected similar accusations and has criticised U.S. sanctions as unlawful economic pressure.

The proposed sanctions could further complicate relations between Washington and Baghdad at a time when Iraq continues balancing strategic ties with both the United States and neighboring Iran.

U.S. sanctions | Business Upturn

Sanctions pressure rises as U.S. targets alleged Iraq-Iran oil smuggling operations