U.S. Imposes Sanctions On Iraqi Official And Militias For Helping Iran Smuggle Oil
Our take
The U.S. Treasury has imposed sanctions on an Iraqi official and affiliated militias for their role in facilitating Iran's smuggling of oil, accusing al-Bahadly of falsifying documents to pass off blended cargoes as purely Iraqi crude. This enforcement action underscores the persistent challenges in curbing Iran's efforts to circumvent oil export restrictions. It also fits into a wider pattern of U.S. measures targeting Iran's oil trade network, including the recent [US Targets Iran Oil Trade Network, Sanctions China-Based Terminal, Shipping Firms And Financial Intermediaries] and the [U.S Sanctions China-Based Oil Refinery, 40 Shipping Companies & Tankers Transporting Iranian Oil]. Together, these actions reveal a sophisticated, transnational web of entities enabling the illicit movement of petroleum products, often exploiting regulatory gaps and the complexities of global shipping to evade detection.
Beyond the immediate geopolitical implications, this case highlights the critical intersection of maritime security and environmental stewardship. Illicit oil shipments often rely on ship-to-ship transfers in international waters, turning off AIS transponders, and other deceptive practices that not only evade sanctions but also increase the risk of oil spills and other ecological damage. For ocean health, such activities represent a measurable threat, as unregulated vessels may bypass safety and environmental standards. Moreover, the blending of Iranian oil with Iraqi crude to disguise its origin complicates market transparency and undermines efforts to track carbon footprints across global supply chains. In an era where empirical data and real-time monitoring are essential for climate indicators, the ability to detect and deter these covert operations
The United States has imposed sanctions on Iraq’s Deputy Minister of Oil, Ali Maarij al-Bahadly, accusing him of helping Iranian-linked networks sell oil by disguising it as Iraqi crude.
The sanctions were announced on Thursday by the US Treasury Department’s Office of Foreign Assets Control (OFAC).
The US also sanctioned three senior members of the Iran-backed groups Kata’ib Sayyid al-Shuhada (KSS) and Asa’ib Ahl al-Haq (AAH), along with several companies linked to oil operations in Iraq.
According to the Treasury Department, al-Bahadly used his position inside Iraq’s oil sector to help divert Iraqi oil products for the benefit of Iran-affiliated networks and militias.
US officials said he helped an Iranian-linked oil smuggler mix Iranian crude with Iraqi oil before it was shipped to international markets.
The Treasury accused al-Bahadly of helping falsify documents that allowed the blended cargoes to be sold as purely Iraqi oil.
It also said he authorised the transport of several million dollars’ worth of oil per day from Iraq’s Qayyarah oil field to VS Oil in Khor Zubayr for export operations.
US authorities said VS Oil oversaw the mixing of Iranian and Iraqi crude before the cargoes were shipped abroad.
Iraq’s Oil Ministry denied the allegations and said it was ready to cooperate with any fair investigation into the claims.
The ministry said crude export operations, tanker loading, oil marketing and related procedures were not part of al-Bahadly’s responsibilities.
Al-Bahadly did not immediately respond to requests for comment.
The sanctions come months after Iraq’s Oil Minister Hayan Abdel-Ghani said Iranian oil tankers intercepted by US forces in the Gulf had been using forged Iraqi documents. Iran denied those accusations.
The Treasury Department also targeted Mustafa Hashim Lazim al-Behadili, also known as Sayyid Awn, who US officials described as a senior economic official for Asa’ib Ahl al-Haq.
According to OFAC, al-Behadili played a major role in oil smuggling, fuel theft and metals trading linked to the militia group after the withdrawal of US forces from Iraq in 2011.
US officials said he worked closely with senior AAH figure Laith al-Khazali and managed oil smuggling operations and militia-linked projects in southern Iraq.
The Treasury also accused him of coordinating with Iran and the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF) on oil shipments involving the militia group.
Four Iraqi companies linked to al-Behadili were also sanctioned. They are Gulf Energy Oil Services Limited, Gulf General Contracting Limited, Iraq International Energy for the Import and Sale for Petroleum Products Limited, and Gulf Energy for General Transport and Marine Services and Real Estate Consultancy LLC.
The US also sanctioned Ahmed Khudair Maksus Maksus, a former deputy secretary-general of Kata’ib Sayyid al-Shuhada, and Mohammed Issa Kadhim al-Shuwaili, also known as Abu Maryam.
According to OFAC, al-Shuwaili worked with Hizballah-linked finance operatives on weapons purchases and deliveries into Iraq.
US authorities said he arranged payments worth millions of dollars to Hizballah and coordinated logistics connected to the transfer of weapons.
US Treasury Secretary Scott Bessent said Iran was exploiting Iraqi oil resources to fund militant activities.
The sanctions freeze any US-based assets belonging to the targeted individuals and entities and generally prohibit Americans from doing business with them.
Washington and Tehran continue discussions over a possible temporary agreement linked to the ongoing conflict between the two countries. Iranian officials have said they are reviewing a US proposal.
The sanctions also come during political negotiations in Iraq as Prime Minister-designate Ali al-Zaidi works to form a new government.
Iraqi media reports and lawmakers have suggested that al-Bahadly was among the leading candidates to become Iraq’s next oil minister.
Former US State Department official Victoria Taylor described the sanctions as a strong message from Washington during Iraq’s cabinet discussions.
She said the move appeared aimed at keeping militia-linked figures away from key government positions.
The developments also come amid tensions in the Strait of Hormuz, one of the world’s busiest oil shipping routes. Around one-fifth of global energy exports pass through the waterway during normal conditions.
According to the source material, Iranian forces have threatened vessels operating in the area, while US forces have imposed restrictions on Iranian ports, affecting oil export movements in the region.
Reference: US Treasury
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