By David S. Cloud

WASHINGTON -- The Treasury Department sanctioned Iraq's deputy oil minister on Thursday, alleging that he was involved in a scheme to help Iran sell its oil in violation of an international embargo by blending it with Iraqi crude.

Deputy Minister of Oil Ali Maarij Al-Bahadly authorized trucking several million dollars' worth of Iraqi oil per day to a smuggler who combined it with Iranian crude, Treasury said. Maarij helped falsify documents, enabling the blended product to be smuggled to market disguised as purely Iraqi oil, the department added.

"Like a rogue gang, the Iranian regime is pillaging resources that rightfully belong to the Iraqi people," Treasury Secretary Scott Bessent said in a statement announcing the move. "Treasury will not stand idly by as Iran's military exploits Iraqi oil to fund terrorism against the United States and our partners."

Maarij couldn't immediately be reached for comment.

The move signals the administration is raising pressure on Baghdad to sever its economic ties to Tehran, which has long used its neighbor to evade international sanctions and as a source of hard currency. It is unusual for Treasury to sanction a high-level official who is in office, especially from Iraq, which the U.S has longstanding relations with.

Iraq is in the midst of a government transition, and its prime minister-designate, Ali Al Zaidi, is assembling a new cabinet and seeking support in Iraq's parliament, which must vote on his nomination before he can take office.

The U.S. has imposed a naval blockade near the Persian Gulf to block tankers carrying Iranian oil and has cracked down on shippers and front companies in the region in recent weeks that it alleges Iran uses to evade sanctions.

Maarij also diverted Iraqi oil to an Iran-backed militia group called Asa'ib Ahl Al-Haq, the Treasury statement said. The department also sanctioned three leaders in Asa'ib Ahl Al-Haq and another Iran-aligned militia, named Kata'ib Sayyid Al-Shuhada.

Treasury contends that Maarij arranged for oil to be diverted to an Iraqi businessman, Salim Ahmed Said, who was sanctioned by the U.S. last year for smuggling Iranian oil blended with Iraqi oil. Maarij granted exportation rights to Said's companies, the department said.

"For years, Maarij has used his official positions -- first as the head of the Iraqi parliament's oil and gas committee, and then within the Iraq Ministry of Oil -- to enrich Said, AAH, and by extension, Iran," the statement said, using an abbreviation for Asa'ib Ahl Al-Haq.

Maarij took over as deputy oil minister in 2024 after earlier serving in Iraq's parliament as head of the oil and gas committee. Treasury alleged that Said bribed officials in the Iraqi government and was involved in installing Maarij in his post.

Write to David S. Cloud at david.cloud@wsj.com

(END) Dow Jones Newswires

May 07, 2026 11:12 ET (15:12 GMT)

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