SOMO: U.S. Sanctions Do Not Cover Iraq's Official Oil Exports

ERBIL (Kurdistan24) – Iraq's state oil marketing body has moved forcefully to insulate the nation's lifeline industry from a spiraling international scandal, with its top official declaring that recent U.S. sanctions targeting a vast Iranian oil smuggling network do not apply to the country's official crude oil exports. Ali Nizar al-Shatri, the general director of the State Organization for Marketing of Oil (SOMO), emphasized that the American sanctions are aimed at private individuals and companies involved in illicit activities, not the state-controlled apparatus responsible for Iraq's legitimate oil trade, in a clear attempt to reassure global markets and distance Baghdad from the affair.

The clarification from SOMO comes as the Iraqi government grapples with the severe fallout from a series of high-profile sanctions announced by the U.S. Treasury Department, which has accused multiple networks of using Iraq as a hub to launder and sell Iranian oil in defiance of international restrictions.

The allegations have cast a shadow over Iraq's energy sector, prompting a swift and high-level response from Baghdad to contain the damage to its international reputation and its critical relationship with Washington.

A Line Between State Business and Illicit Networks

In his definitive statement on the matter, SOMO's General Director Ali Nizar al-Shatri drew a sharp distinction between the state's operations and the private entities now in Washington's crosshairs.

"The sanctions issued by the U.S. Treasury are not related to Iraq’s ports or oil exports," al-Shatri stated. He was adamant that the measures "rather concern individuals who own private companies and are involved in transfers; therefore, these sanctions have no connection to SOMO."

Seeking to project an image of compliance and control, he further affirmed his organization's commitment to transparency, stating, "We are committed to every instruction and decision for the protection of the resources of Iraq."

This position aligns with previous statements from the Iraqi government.

In a statement addressing regional tensions and oil sector integrity, Iraqi Oil Minister Hayan Abdul Ghani revealed that Iranian commercial tankers had used falsified Iraqi documentation to evade international sanctions.

Speaking at a press briefing on Sunday, Abdul Ghani stressed that the Iraqi government had immediately informed U.S. authorities of the incident and denied any involvement, underscoring Baghdad’s commitment to transparency and legal compliance in global oil exports.

The Anatomy of the Sanctioned Smuggling Operations

The controversy exploded into public view in early July when the U.S. Treasury announced sanctions against a smuggling network it said was run by an Iraqi merchant named Salim Ahmed Said.

According to a U.S. Treasury statement, this network had been purchasing and selling Iranian oil with a value of "billions of dollars" since at least 2020, often by mixing it with Iraqi oil to disguise its origin.

The issue escalated dramatically in early September when the Treasury sanctioned a second, even larger network allegedly operated by Iraqi-Kittitian businessman Waleed Khaled Hameed al-Samarra’i, which it claimed was generating over $300 million annually for Tehran through similar schemes involving a fleet of vessels and a web of shell companies.

U.S. Treasury Secretary Scott Bessent has made it clear that these actions are part of a broader "maximum pressure" campaign aimed at crippling Tehran's revenue streams.

"President Trump has been clear. Iran must stop sponsoring terror, halt its bloody proxy wars and cease its pursuit of nuclear weapons," Bessent stated in the video message released on the social media platform X on Tuesday. "That is why Treasury is taking further action to degrade the Ayatollah and his regime's ability to finance terrorism around the world, including its growing influence in Iraq."

The Treasury Secretary detailed the nature of the targeted operation, explaining that his department is "sanctioning a rogue businessman and his network of companies and vessels that smuggle Iranian oil disguised as Iraqi oil to avoid U.S. sanctions."

This illicit trade, Bessent warned, not only funnels hundreds of millions of dollars to Tehran but also compromises the integrity of the global energy market.

"Smuggling of this nature allows Iranian oil to be sold to U.S. allies and possibly to the United States itself in violation of U.S. sanctions," he said.

Baghdad's Response: Investigation and Damage Control

Faced with mounting international scrutiny, the Iraqi government has launched a formal effort to address the crisis.

On Saturday, Iraqi Prime Minister Mohammed Shia’ al-Sudani ordered the formation of a high-level investigative committee to probe the allegations of illicit oil mixing and smuggling at Iraqi ports and in its territorial waters.

The Prime Minister's office stated that the matter must be handled with "full seriousness" and that the committee's findings would be submitted to the Council of Ministers for "appropriate legal and administrative measures" to be taken to safeguard public funds.

This move is widely seen as a calculated attempt by Baghdad to demonstrate transparency and accountability, and crucially, to reassure its Western allies that it is taking the issue of sanctions evasion seriously, thereby protecting its own credibility in the global oil trade.

A Wider Campaign of Economic Pressure

The sanctions on the oil smuggling networks are not isolated incidents but rather the latest and most public manifestation of a sustained U.S. economic campaign that has put significant pressure on Iraq's fragile economy.

As previously reported by Kurdistan24, this pressure campaign has been felt across multiple sectors.

A major gas deal with Turkmenistan, which would have piped gas through Iran to help alleviate Iraq's chronic electricity crisis, collapsed under U.S. pressure over fears that the arrangement would financially benefit Tehran. This has left Iraq struggling to meet its energy needs and highlights its dependence on external actors.

Furthermore, Washington's financial scrutiny has extended deep into Iraq's banking sector.

Dozens of Iraqi banks have been hit with U.S. sanctions in recent months for a range of alleged violations, including illicit U.S. dollar transactions and dealings with other blacklisted entities.

This has strained Iraq's financial system and increased tensions between the Central Bank of Iraq and the U.S. Treasury. These compounding pressures place Iraq in an increasingly difficult position, trapped between its significant economic and political ties to neighboring Iran and its strategic dependence on the United States and the U.S. dollar-denominated global financial system.

SOMO's latest statement represents a critical effort to erect a firewall around Iraq's most vital economic sector, seeking to protect the integrity of its legitimate oil revenues while the government navigates the complex and dangerous fallout from the illicit activities occurring within its borders and its territorial waters.