Iraq denies US allegations tying official to Iran-linked oil diversion

ERBIL, Kurdistan Region - The Iraqi oil ministry on Friday denied US allegations that a deputy oil minister was using his position to divert Iraqi oil products in order to benefit Iran-affiliated oil entities, in violation of US sanctions.

The remarks come a day after the US Department of the Treasury had imposed sanctions on Ali Maarij al-Bahadly, along with three senior commanders of Iran-aligned armed groups, accusing them of “exploiting Iraq’s oil sector and undermining the country’s security.”

The ministry denied in a statement the allegations against the Undersecretary for Distribution Affairs, Bahadly, noting that “the processes of crude oil export, marketing, and loading of tankers, as well as related procedures” are not among his duties, but are instead “handled by the relevant authorities and companies according to approved frameworks and mechanisms.”

The state-owned Iraqi Oil Marketing Company (SOMO) had “previously issued a statement clarifying the mechanisms of export and marketing and denying the aforementioned issue,” referring to allegations of Bahadly’s abuse of power to benefit Iran, the statement added.

The ministry also stressed “the importance of adopting transparency and responsibility in dealing with all cases and allegations,” declaring “its full readiness to cooperate and conduct any fair investigation,” in line with its “belief in the role of the judiciary and the [Federal] Commission of Integrity, and its respect for the state’s oversight and legal institutions.”

The Office of Foreign Assets Control (OFAC) of the US Department of the Treasury said on Thursday that it was increasing “economic pressure on Iran and its proxy militias in Iraq by designating individuals and businesses exploiting Iraq’s oil sector and undermining the country’s security.”

The sanctions included Bahadly, whom the Treasury accused of “abus[ing] his position to facilitate the diversion of oil to be sold for the benefit of the Iranian regime and its proxy militias in Iraq,” including by “facilitating the diversion of Iraqi oil products to benefit known Iran-affiliated oil smuggler Salim Ahmed Said, as well as Iran-backed terrorist militia Asa’ib Ahl Al-Haq.”

The Treasury also sanctioned Mustafa Hashim Lazim al-Behadili, described as a “leader and economic official” for Asa’ib Ahl Al-Haq, who “materially assisted, sponsored, or provided financial, material, or technological support for, or goods or services to or in support of” the group, and who “owns or controls four Iraqi companies operating in the oil sector.”

In addition, Ahmed Khudair Maksus and Mohammed Issa Kadhim al-Shuwaili were sanctioned as senior commanders of the Kata’ib Sayyed al-Shuhada Iraqi armed group, accused of “collaborating directly” with the Iran-backed Hezbollah movement in Lebanon “on the purchase and delivery of weapons into Iraq.”

According to the Treasury, the designations are part of the Economic Fury campaign targeting the Iranian government.

The US launched Operation Epic Fury on February 28, a joint aerial campaign with Israel against Iran, striking more than 17,000 sites over six weeks before a Pakistan-mediated ceasefire was agreed on April 8.

While the first round of talks concluded without a final agreement on April 11, a second round has yet to take place, with a comprehensive resolution to the conflict still pending.

The US in mid-April launched the high-intensity Economic Fury campaign as the financial counterpart to Operation Epic Fury against Iran, aiming to isolate Tehran from the global financial system and cut off its remaining revenue streams.

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