Washington, D.C. – On September 2, 2025, the US State Department declared it had imposed sanctions on a network of smugglers of Iranian oil through Iraq.

The sanctions are directed at a secret operation by Waleed al-Samarra’i, an Iraqi-Saint Kitts and Nevis national, who is alleged to be masquerading as Iranian oil as Iraqi crude to raise illegal revenue on behalf of Tehran.

The move is part of a wider US effort to deprive Iran of financial resources, which Washington contends are being used to finance destabilizing actions throughout the Middle East and further afield.

The State Department press statement affirmed that the actions are a direct response to National Security Presidential Memorandum 2 (NSPM-2), which details a policy of maximum pressure on the Iranian regime.

“Today, the United States is acting decisively to stem the flow of revenues to the Iranian regime for its destructive and destabilizing conduct in Iraq, the Middle East, and around the world,” a State Department press statement said.

The memo forms part of the foreign policy of the Trump administration to limit the influence of Iran and ensure it does not acquire nuclear weapons. The US will aim at depreciating the capacity of the Iranian regime to attack the United States and its allies by attacking their oil revenue.

Smuggling Oil under Sanctions

The main technique used by the network is the undetectable mixing of Iranian oil and Iraqi oil prior to its sale in the international markets. This will enable the oil to be marketed as being of 100 percent Iraqi origin, thus avoiding international sanctions against Iranian exports.

The scheme has been claimed to be earning both the Iranian government and al-Samarrai hundreds of millions of dollars.

In another, but closely related, release by the Office of Foreign Assets Control (OFAC) of the US Treasury Department, the operation involved a network of companies and vessels.

“Iraq cannot become a safe haven for terrorists, which is why the United States is working to counter Iran’s influence in the country,” said Secretary of the Treasury Scott Bessent

The network is based in the United Arab Emirates and consists of two companies, Babylon Navigation DMCC and Galaxy Oil FZ LLC, and nine ships under the Liberian flag. These ships supposedly carry out ship-to-ship transfers in the ocean and in Iraqi ports to mix the oil and cover their transactions with shell companies set up in the Marshall Islands. These individuals and entities have been identified by the Treasury Department, and any property or interest they possess in the United States is blocked.

Response of Iraq

The U.S has been accusing Iranian actors of using the Iraqi economy to avoid sanctions. The same day the sanctions were declared, the State Organization on Marketing of Oil (SOMO) of Iraq released an announcement saying that there was no oil mixing or smuggling in its ports.

The director of SOMO, Ali Nazar al-Shatari, stated, “Oil tankers are subject to real-time monitoring from the time they are loaded until they arrive at the refineries.”

The sanctions, however, underline the fragile state of the economy of Iraq, and this is an issue that lawmakers and economists alike feel is being undermined by these illicit practices.

In July, Iraq was again warned by economist Nizar Mohi that the country would receive additional sanctions in case it did not alter its approach to the management of its ports. This step by the US is the most recent in a sequence of actions against Iranian-supported networks of smuggling in the region.

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