A fuel oil smuggling scheme is netting Iran and its allies at least $1 billion per year, according to new reporting from Reuters. The operation runs through Iraq, which has kept its alliances with both Iran and the U.S.
It has allowed Iran to avoid U.S. sanctions but also leaves Iraq vulnerable to facing U.S. sanctions of its own.
Iraq has a program allowing asphalt plants to receive fuel at heavily discounted prices. Companies and groups divert as many as five million barrels worth of heavy fuel oil away from the plants and sell them mostly to countries in Asia instead.
Reuters reports companies and people in Iraq, Iran and multiple other Gulf countries participate in the scheme. They say that while fuel oil smuggling existed for years, this particular project grew after Prime Minister Mohammed Shia’ Al Sudani took power in Iraq in 2022.
Iraq may soon be at a political crossroads. Shi’ite Muslims backed by Iran are crucial to keeping Iraq’s government in power.
But U.S. President-elect Donald Trump wants to take a strict approach toward Iran. Tougher sanctions could be coming as Trump hopes to limit Iran from growing its nuclear program. Trump also wants to stop Iran from supporting groups like Hamas and Hezbollah, who have been attacking Israel in recent years.
Reuters reports that some Iraqi officials are worried that Iraq could face sanctions for the oil scheme and other activities helping Iran get around U.S. sanctions.
