Iraqi officials are trying to stop the US from slapping sanctions on its critical oil sector over suspicions that Iran is smuggling crude through the country, three Iraqi sources told Al Araby Al Jadeed, the Arabic-language sister site of The New Arab.
The US has accused Iran of covertly exporting oil via Iraq in an effort to evade its stringent sanctions regime, which aims to prevent Iranian oil from being sold on the world market.
The US navy recently discovered Iraqi shipping documents on board Iranian tankers seized in the Persian Gulf, providing evidence that it is disguising its own oil as Iraqi crude to bypass the restrictions.
The Trump administration is now considering sanctioning the state-owned Iraqi Oil Marketing Company (SOMO), which manages the country's oil exports.
"Iraq is moving quickly to prevent any US sanctions targeting the oil corporation or its individuals," an Iraqi government adviser told Al Araby Al Jadeed.
Any measures taken against the country's oil sector would cause a "big and real crisis", they said.
Iraq was the second-largest oil exporter in OPEC in 2024 and seventh-biggest in the world, according to the US Energy Information Administration.
State finances are heavily dependent on oil, which accounted for around 90% of government revenue in 2023.
Iraq's oil minister Hayyan Abdul Ghani said in March that the shipping documents found by the US had been forged and denied any government involvement.
The Trump administration is attempting to cripple Iran's oil industry as part of its "maximum pressure" sanctions strategy to force Tehran into dismantling its nuclear programme.
Since taking office in January, the administration has taken aim at an international oil smuggling network that has helped Iran circumvent the US embargo, and sanctioned Chinese oil importers.
The US Treasury earlier this month imposed sanctions on an Iraqi-British citizen who it said was involved in smuggling Iranian crude through Iraq.