US President-elect Donald Trump’s planned maximum sanctions against Iran could extend to neighbouring Iraq, targeting OPEC’s second largest crude oil producer and a known hotbed of oil smuggling, according to three sources familiar with the talks.
According to S&P Global Commodity Insights, the imposition of secondary sanctions on Baghdad, similar to the US sanctions on Iran, would threaten Iraq’s crude oil production of more than 4 million b/d and exports of around 3.6 million b/d.
Specific organisations and individuals with links to Iran, including Iraq’s state oil marketer SOMO, could be targeted, according to experts familiar with the matter. Other sources, speaking on condition of anonymity, said that Iraq’s sanctions exemption for imports of Iranian gas and electricity would at least be terminated, with dire implications for Iraq’s ability to generate electricity.
The sanctions target Iran’s pervasive influence in Baghdad, where Tehran-linked political groups and militias control much of Iraq’s government and oil sector.
According to the International Monetary Fund, Iraq derives the vast majority of its government revenues – 95 per cent – from crude oil exports. In 2022, Iraq’s net oil revenues were $131 billion.
