US sanctions Iraq’s deputy oil minister over alleged role in helping Iran bypass bans
Abubakr Al-Shamahi
The US Treasury Department on June 1 imposed sanctions on Iraq’s Deputy Oil Minister Ali Maarij al-Bahadly and leaders of Iran-backed militias, accusing them of helping Iran evade US restrictions on oil exports. Washington alleges that al-Bahadly played a central role in diverting Iraqi petroleum products to benefit an Iran-linked smuggler, while al-Behadili is accused of controlling oil smuggling finances and negotiating with Iran’s Quds Force. The sanctions heighten tensions between the US and Iran amid ongoing disputes over the Strait of Hormuz.
On June 1, the US Treasury Department officially imposed sanctions on Iraq’s Deputy Oil Minister Ali Maarij al-Bahadly and leaders of several Iran-backed militias. Washington accuses the group of helping Iran sell oil through Iraq to evade US sanctions.
US Treasury Secretary Scott Bessent described the behavior as “like a lawless gang,” and stated: “The Iranian regime is plundering resources that belong to the Iraqi people to finance terrorism against the US and its partners.”
As of now, the Iraqi and Iranian governments have not issued an official response to the allegations. The sanctions come amid rising tensions between the US and Iran over control of the Strait of Hormuz, a vital oil transit route from the Gulf.
Who is being sanctioned by the US?
Ali Maarij al-Bahadly is the most prominent figure on the June 1 sanctions list. He previously chaired Iraq’s parliamentary Oil and Gas Committee before taking on multiple roles at the Oil Ministry, including head of the Licensing and Contracts Office, acting minister, and deputy minister since 2024.
Also sanctioned is Mustafa Hashim Lazim al-Behadili, described as a “leader and economic official” of the Iran-backed Asa’ib Ahl al-Haq movement. Two others, Ahmed Khudair Maksus Maksus and Mohammed Issa Kadhim al-Shuwaili, are considered senior officials in the Iran-aligned Kata’ib Sayyid al-Shuhada force.
According to the US Treasury, al-Behadili “controls oil smuggling finances” and negotiated transportation contracts for Iranian oil with the Quds Force of Iran’s Islamic Revolutionary Guard Corps. Meanwhile, Maksus and al-Shuwaili are alleged to be involved in illegal weapons purchases.
Is Iran exploiting Iraq to avoid sanctions?
This is the core argument from the US Treasury. The sanctions documents state that al-Bahadly “played a pivotal role in facilitating the diversion of Iraq’s petroleum products” to benefit an Iran-linked oil smuggler and the Asa’ib Ahl al-Haq group. According to Washington, the smuggler labeled Iranian oil as Iraqi oil to help Tehran evade sanctions.
The US also asserts that corruption within the Iraqi government has enabled continued smuggling, with al-Bahadly at the center.
Earlier, in March, Iraqi Oil Minister Hayan Abdel-Ghani acknowledged that Iranian oil tankers had previously used forged Iraqi documents to avoid US sanctions.
Experts told Reuters in December 2024 that Iran earns at least $1 billion annually from a smuggling network: Iranian fuel is moved from Iraqi asphalt plants, blended with Iraqi oil, and then exported as pure Iraqi crude. Reuters also cited sources saying Iran obtained hard currency from Iraq through exports, thereby evading US sanctions on its banking system.
What are the US sanctions on Iranian oil?
The Trump administration describes the Iranian oil sanctions as part of a “maximum pressure” campaign to subdue the Iranian government. Trump first imposed a ban on Iranian oil in 2018 after withdrawing from the nuclear deal with Tehran. These measures prevent Iran from freely selling oil on global markets, though the US allowed some countries limited purchases.
The Biden administration largely maintained the sanctions, but Trump intensified them during his second term, especially ahead of the US-Israel conflict targeting Iran. Oil is Iran’s primary resource—it is one of the world’s largest producers, accounting for about 80% of exports. Oil revenue makes up roughly a quarter of the state budget.
What is the relationship between Iraq and Iran?
Iraq and Iran are close allies, particularly under the leadership of the Iran-aligned Coordination Framework in Baghdad. This coalition represents Iraq’s Shia Muslims, who share strong religious ties with Iran’s leadership.
Many current Iraqi leaders lived in Iran, especially before 2003 when former President Saddam Hussein was ousted in the US-led invasion. This has helped Iran expand its influence by funding pro-Iran Shia armed groups, many of which have political wings.
These Iran-aligned groups have infiltrated key economic sectors, including oil, allowing Iran to leverage this control to create a shadow economy and fund pro-Iran groups across the Middle East.
However, Iraq must walk a tightrope. While ties with Iran are based on geography and ideology, Iraqi leaders are also careful not to antagonize the US, which provides crucial military and economic aid. Trump has used this leverage to prevent Nouri al-Maliki from returning as prime minister, instead supporting new Prime Minister Ali al-Zaidi.
