Why has the US sanctioned Iraq’s deputy oil minister for helping Iran?

The US Treasury has sanctioned Iraq’s Deputy Oil Minister, Ali Maarij al-Bahadly, and leaders of pro-Iran militias, accusing them of helping Iran to sell oil in violation of US sanctions.

“Like a rogue gang, the Iranian regime is pillaging resources that rightfully belong to the Iraqi people,” said US Treasury Secretary Scott Bessent. “Treasury will not stand idly by as Iran’s military exploits Iraqi oil to fund terrorism against the United States and our partners.”

Neither Iraq nor Iran has responded.

Thursday’s sanctions also come as the US and Iran battle over control of the Strait of Hormuz, the vital conduit for oil exports from the Gulf region.

Iraq has come under pressure from the US in recent months over accusations that it is too close to neighbouring Iran. President Donald Trump warned earlier this year that Washington would stop support for Iraq – if pro-Iran Nouri al-Maliki became Iraq’s prime minister. He later dropped out of the running.

Let’s take a closer look.

Who has the US sanctioned?

Al-Bahadly is the most prominent figure to be sanctioned by the US on Thursday. He has overseen Iraqi oil governance for years, first as head of the Iraqi parliament’s oil and gas committee. The US Treasury says he later held roles in the oil ministry, including head of the licensing and contracts office, acting minister and deputy leader of the ministry, which has been his current position since 2024.

Also sanctioned were Mustafa Hashim Lazim al-Behadili, described as a “leader and economic official” for the Iran-backed Asa’ib Ahl al-Haq movement, as well as Ahmed Khudair Maksus Maksus and Mohammed Issa Kadhim al-Shuwaili, both referred to as senior officials within the pro-Iran Kata’ib Sayyid al-Shuhada.

The US Treasury alleged that al-Behadili “controlled oil smuggling financing” and dealt directly with Iran and the Islamic Revolutionary Guard Corps’ Quds Force, with whom he negotiated contracts to ship oil from Iran. Maksus and al-Shuwaili were accused of being involved in illicit weapons purchases.

None has commented on the allegations.

Does Iran use Iraq to avoid sanctions?

That is the US Treasury’s argument. In its designation, the Treasury says that al-Bahadly was “instrumental in facilitating the diversion of Iraqi oil products” to benefit an Iran-affiliated oil smuggler and Asa’ib Ahl al-Haq. The smuggler, according to Washington, labelled Iranian oil as Iraqi to enable Tehran to avoid sanctions.

The US also says that corrupt practices in the Iraqi government allowed for the smuggling operation to continue, placing al-Bahadly at the heart of the operation.