Iraq tries to deter US sanctions over alleged Iran oil smuggling

Iraqi officials are working to prevent the U.S. from imposing sanctions on its oil sector amid allegations that Iran is smuggling crude through Iraq, according to The New Arab on July 15th. 

Iran faces accusation by the U.S. of secretly exporting oil through Iraq, in an attempt to avoid sanctions that block Iranian oil from being sold on the world market.  

This U.S. Navy recently found Iraqi shipping documents aboard Iranian tankers seized in the Persian Gulf, suggesting that Iran is disguising its oil as Iraqi crude to avoid sanctions.

In response, the Trump administration is reportedly weighing the possibility of sanctioning Iraq’s state-owned Oil Marketing Company (SOMO), which oversees the country’s oil exports.

“Iraq is moving quickly to prevent any U.S. sanctions targeting the oil corporation or its individuals,” an Iraqi government adviser told Al Araby Al Jadeed, The New Arab’s Arabic-language sister site.

Any move taken against the nation’s oil sector would cause a “big and real crisis”, they commented.

Last year, Iraq ranked as the second-largest oil exporter within OPEC and the seventh-largest globally, the U.S. Energy Information Administration said.

The country’s economy relies heavily on oil, which made up approximately 90% of government revenue in 2023.

Iraq’s Oil Minister, Hayyan Abdul Ghani, stated in March that the shipping documents discovered by the U.S. were forged, denying any involvement by the Iraqi government.

Previously, U.S. President Trump signed a memorandum – calling for “maximum economic pressure” to stop Iran from developing a nuclear weapon and to advance a broader objective of crippling Iran’s oil sector by bringing the country’s “oil exports to zero.”

Since coming into office in January, the Trump administration has targeted an international oil smuggling network accused of helping Iran bypass U.S. sanctions, and has also imposed penalties on Chinese oil importers.

Earlier in July, the U.S. Treasury sanctioned an Iraqi-British national, alleging he was involved in smuggling Iranian oil through Iraq.

The New Arab, Maghrebi.org