US sanctions Iraqi deputy oil minister over alleged Iran oil diversion scheme
The United States has imposed sanctions on Iraq's Deputy Oil Minister Ali Maarij al-Bahadly, accusing him of aiding Iran in evading restrictions on its oil exports. The Treasury Department's Office of Foreign Assets Control (OFAC) announced the measures on Thursday, also designating three leaders of Iran-backed armed groups, according to reports from Al Jazeera and The Hindu.
Washington's action targets al-Bahadly, who has held various positions in Iraqi oil governance since 2024, including head of the licensing and contracts office, acting minister, and deputy leader of the ministry. The Treasury alleges that al-Bahadly used his official positions—first as head of the Iraqi parliament's oil and gas committee, then within the Iraq Ministry of Oil—to facilitate the diversion of Iraqi oil products to benefit an alleged Iran-affiliated oil smuggler, Salim Ahmed Said, and Asa'ib Ahl al-Haq (AAH), a pro-Iran militia.
"Like a rogue gang, the Iranian regime is pillaging resources that rightfully belong to the Iraqi people," Treasury Secretary Scott Bessent said in a statement, as quoted by multiple outlets. "Treasury will not stand idly by as Iran's military exploits Iraqi oil to fund terrorism against the United States and our partners."
Broader sanctions and context
In addition to al-Bahadly, OFAC sanctioned Mustafa Hashim Lazim al-Behadili, described as a "leader and economic official" for Asa'ib Ahl al-Haq, as well as Ahmed Khudair Maksus Maksus and Mohammed Issa Kadhim al-Shuwaili, both referred to as senior officials within Kata'ib Sayyid al-Shuhada (KSS). Together with Kataib Hezbollah, Washington holds these groups accountable for attacks on US personnel and civilians, according to reports.
The sanctions come as talks between Washington and Tehran show "timid signs of progress," with Iranian officials saying they are reviewing a US proposal, per Al Jazeera. However, the US and Iran are also locked in a standoff over the Strait of Hormuz, a vital conduit for Gulf oil exports. One report from Al Jazeera claimed that Iranian forces have "effectively gained control" of the strait by hitting or threatening vessels attempting to transit—a claim that has not been independently verified by other sources in this coverage.
The United States has unilateral sanctions on Iranian oil, seeking to punish any country or company that buys it, according to The Hindu. Washington has been escalating pressure on Iraq to break off alleged cooperation with armed Iraqi Shia groups linked to Iran.
US pressure on Iraq's new government
The sanctions arrive amid intense US pressure on Iraq's incoming government. President Donald Trump has congratulated Iraq's Prime Minister-designate Ali al-Zaidi, who was selected after heavy US pressure against the frontrunner, according to The Hindu. Trump earlier warned that Washington would stop support for Iraq if pro-Iran candidate Nouri al-Maliki became prime minister; al-Maliki later dropped out of the race.
A US official, cited by The Hindu, said armed groups have hit US facilities in Iraq more than 600 times since the United States and Israel attacked Iran on February 28, before a ceasefire was announced. The official said Washington is looking for "concrete actions" from Iraq to cast aside these groups before resuming full cooperation.
Allegations and reactions
State Department spokesman Tommy Pigott said al-Bahadli "abused his government position to divert Iraqi oil in support of the Iranian regime and its terrorist proxies." He added: "As part of a scheme to evade sanctions, Iranian oil was fraudulently mixed with Iraqi oil and sold for Iran's benefit."
The Treasury previously sanctioned Salim Ahmed Said last year for running a scheme of companies selling Iranian oil falsely declared as Iraqi oil to avoid sanctions, according to Al Jazeera. US officials allege Said obtained favored access to Iraqi oil and procured forged documents from Iraqi government sources.
Neither Iraq nor Iran has responded to the sanctions, as of the latest reports.
Perspectives
US perspective: The sanctions are framed as a necessary measure to cut off funding for Iran's military and its proxies, which Washington accuses of attacking US personnel and civilians. Treasury Secretary Bessent's statement emphasizes the exploitation of Iraqi resources.
Iranian/Iraqi perspective: There has been no official response from either country. However, Iraq's balancing act between its close ties to Iran and its relationship with the US is a central theme, with the new government facing pressure to distance itself from Tehran-aligned groups.
Regional context: The sanctions coincide with a broader US-Iran standoff over the Strait of Hormuz, adding a strategic dimension to the financial measures. The claim that Iran has gained control of the strait, if true, would represent a significant escalation, but it remains unverified by multiple sources.