The U.S. Treasury Department expanded its sanctions to include Iraq’s Deputy Oil Minister, Ali Maarij Al-Bahadly, alongside multiple associated individuals and companies, accusing them of facilitating oil smuggling that benefits Iran and Iran-aligned militias. This crackdown aims to disrupt longstanding networks shipping Iraqi oil illicitly to support Tehran’s military and proxy groups.
According to U.S. officials, Maarij used his positions within Iraq’s oil governance to redirect millions of dollars worth of Iraqi crude daily from the Qayara Oil Field to the VS Oil Terminal, where it was allegedly mixed with Iranian oil before export. The proceeds reportedly fund Iran-backed militias like Asa’ib Ahl Al-Haq, enabling their military and political operations.
This move by the Office of Foreign Assets Control (OFAC) is part of a broader U.S. policy to limit Iranian influence and curb the involvement of Chinese and Russian interests in Iraq’s energy sector. Washington has also warned foreign banks and Chinese-affiliated refiners that they could face secondary sanctions if they facilitate transactions related to Iran’s oil smuggling activities.
The Treasury’s ramped-up actions coincide with ongoing diplomatic efforts, including recent discussions between U.S. and Chinese leadership, underscoring the U.S. commitment to targeting financial channels that support Iran’s regime and its proxy networks. The sanctions reflect a strategic shift towards intensifying economic pressure on Iran through controlling Iraq’s crucial oil resources.
These developments carry significant implications for global oil markets, as the crackdown threatens to disrupt supply chains that have operated for years under murky conditions. By tightening the noose on illicit oil flows, the U.S. aims to foster greater Western influence over Iraq’s oil industry and ensure revenues do not support activities contrary to regional stability and U.S. interests.