U.S. sanctions Iraqi oil official; DOJ, CFTC probe $2.6B trades
U.S. Treasury blacklists Iraq’s deputy oil minister and militia figures for allegedly mixing Iranian crude into Iraqi exports. DOJ and CFTC are reviewing about $2.6B in suspicious oil trades.
The U.S. Treasury on Thursday added Iraq’s deputy oil minister and several Iran-backed militia figures to its sanctions list, accusing them of mixing Iranian crude with Iraqi exports. At the same time, the Justice Department and the Commodity Futures Trading Commission opened a review of roughly $2.6 billion in large bearish oil positions that were placed shortly before public de-escalation announcements in the 2026 Iran conflict.
The Treasury’s Office of Foreign Assets Control designated Ali Maarij Al-Bahadly under Executive Order 13902. OFAC alleges Al-Bahadly used ministry positions he has held since 2018 to benefit an Iran-linked smuggler and militia networks. The agency says Iranian barrels were blended with Iraqi crude at the VS Oil Terminal, provenance documents were falsified, and the product was exported as Iraqi crude. Three senior militia leaders and four oil-services companies were also added to the sanctions list.
Treasury officials tied the listings to Operation Economic Fury, the administration’s campaign to reduce revenue streams for the Iranian government and its proxies. The campaign previously targeted digital assets and financial channels; officials reported freezing $344 million in U.S. dollar–pegged stablecoin and seizing nearly $500 million in funds linked to Iran.
Treasury Secretary Scott Bessent characterized the Iranian regime as “a rogue gang” taking resources he said belong to the Iraqi people. Treasury officials stated the new designations target both the people involved and the companies that provided services enabling the oil transfers.
Separately, U.S. prosecutors and market regulators are examining four large short positions placed minutes to hours before announcements that lowered Iran-related tensions. Market data shows a $500 million position placed about 15 minutes before a March 23 delay of planned strikes, a $960 million bet placed hours before an April 7 ceasefire, a $760 million position taken ahead of an April 17 statement about shipping in the Strait of Hormuz, and a $430 million trade before an April 21 truce extension. The trades together total about $2.6 billion; the data do not identify the traders.
Investigators are reviewing whether the timing of those positions reflected advance knowledge of presidential or diplomatic actions that moved oil markets. The Justice Department and the CFTC have confirmed they are coordinating on the inquiry but declined to discuss investigative details.
OFAC’s public descriptions focus on the mechanics of alleged oil diversion and document forgery at terminal facilities. Treasury officials said the sanctions are aimed at the network that arranged blending and the firms that provided shipping and documentation services. Regulators have not publicly linked the suspicious market trades to the sanctioned networks.
Both the Treasury and market authorities said the investigations remain active and that further enforcement actions are possible if evidence supports charges or additional designations.
