US Sanctions Raise Questions Over Future of Iraq-Iran Trade
The US Treasury Department has imposed new sanctions on entities linked to Iran as part of Operation Economic Outcast, a campaign aimed at restricting Tehran's revenues and curtailing its support for terrorism. The measures have raised concerns about the future of trade between Iraq and Iran, which imports between $10 billion and $12 billion worth of goods from Tehran annually.
The sanctions target nearly 60 entities, individuals, and vessels connected to Iran, with a focus on controlling Iranian oil and petroleum exports, which make up the largest share of its global exports. In 2024, over 40% of Iran's exports consisted of oil, mineral products, and chemicals, with mineral fuels accounting for 34%.
Iraq is heavily reliant on Iranian goods, importing more than $11 billion worth in 2024, with natural gas, petroleum products, and chemicals making up a significant portion of that total. The country's electricity ministry spokesperson noted that Baghdad currently imports 25 million cubic meters of gas daily from Iran, with debts deposited in the Trade Bank of Iraq.
The US State Department has urged international partners to support Operation Economic Outcast, but it remains unclear how Washington will manage the $11 billion debt owed by Iraq to Tehran or allow for continued flow of oil and commercial goods. The uncertainty surrounding these questions leaves the future of this partnership unresolved.