US Warns Iraq Over Oil Smuggling Ties to Iran
The U.S. warns Iraq over Iranian oil smuggling, threatening sanctions on SOMO and freezing $350M in revenue. Iraqi MPs plan to summon the Oil Minister amid fears of an economic crisis, as over 90% of Iraq’s income depends on oil exports.
By Kamaran Aziz
ERBIL (Kurdistan24) – The United States has warned the Iraqi government that ongoing oil smuggling operations involving Iranian crude could trigger severe sanctions, potentially targeting Iraq's State Organization for Marketing of Oil (SOMO) and freezing $350 million in oil revenue unless implicated individuals are held accountable.
In a direct notification on Thursday, July 3, the U.S. State Department informed Baghdad of sanctions against six entities and the identification of four vessels engaged in significant transactions involving Iranian oil. The U.S. Department of the Treasury subsequently designated 22 companies based in Hong Kong, the UAE, and Türkiye for facilitating the sale of Iranian petroleum products that benefit Iran's Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF).
Ahmed Sarji, an economic analyst, told Kurdistan24, "U.S. sanctions on Iraq have become numerous and are being enforced because Iraq is one of the countries that does not abide by agreements, which is why it faces the most sanctions. This will have a negative impact on the country's economy, especially the smuggling of Iranian oil with Iraqis behind it. This is a disaster. The federal Minister of Oil must provide an explanation and not allow us to face new American sanctions because of Iran."
The Iraqi Parliament wants to conduct a thorough investigation into this case, as more than 90% of Iraq's revenue depends on oil, and if that income is jeopardized, a major financial crisis will erupt. Therefore, the Oil and Energy Committee will summon the Minister of Oil and the directors of both the SOMO company and the ministry's transportation company next week to hold them accountable for this smuggling.
Sabah Subhi, a member of the Iraqi Parliament's Oil and Energy Committee, stated, "We have contacted the federal Minister of Oil to come to parliament so we can question him about this matter, as this smuggling jeopardizes Iraq's exports." He added, "95% of Iraq's revenue depends on oil exports."
Within the framework of U.S. economic sanctions on Iran, countries worldwide have been notified that it is strictly forbidden to purchase oil and its products from Iran. Any country that engages in such transactions will face economic sanctions.
The U.S. notification highlights vulnerabilities in Iraq's oil sector, where alleged involvement of political figures in smuggling Iranian oil risks escalating tensions amid existing sanctions on Iran, potentially leading to direct penalties on SOMO and withheld funds that could strain Iraq's oil-dependent economy.
Economic analyst Ahmed Sarji's comments underscore Iraq's pattern of non-compliance with agreements as a factor in recurring sanctions, framing the smuggling as a catastrophic breach that demands accountability from the Oil Minister to prevent further economic fallout.
The Iraqi Parliament's planned investigation and summons reflect proactive measures to safeguard revenues, which constitute over 90% of national income, with MP Sabah Subhi emphasizing the threat to exports and the urgency of addressing the issue to avert a financial crisis.
This development occurs against the backdrop of global prohibitions on Iranian oil trade, illustrating the broader implications for countries navigating U.S. sanctions while managing internal oversight challenges.
Kurdistan24 correspondent Shvan Jabbari contributed to this report.
