US Halts Shipment of Iraqi Oil Dollars Amid Efforts to Counter Iran Ties

US Halts Dollar Shipment to Iraq Amid Tensions with Iran-Backed Groups

The United States has suspended shipments of US dollars to Iraq’s central bank, according to officials cited by The Wall Street Journal. This move comes as the US pushes Baghdad to strengthen its ties with Washington and reduce its reliance on Iran.

A recent cargo plane shipment carrying nearly $500 million in US banknotes was blocked by the US Department of the Treasury. The money originated from Iraqi oil revenues held at the Federal Reserve Bank of New York. This is not the first time that shipments have been delayed; a similar delivery was suspended in late February, following the start of the US-Israel war on Iran.

The US has also carried out air attacks against armed factions in Iraq linked to Iran, including groups affiliated with the Popular Mobilisation Forces (PMF). In response to these actions, Iraq’s central bank stated that it had sufficient US currency reserves. The bank did not comment directly on the halted deliveries.

Following the 2003 invasion of Iraq, the US took control over the management of Iraqi oil revenues, placing billions of dollars in proceeds at the Federal Reserve Bank of New York. This arrangement has been used to stabilize Iraq’s economy and provide large shipments of cash to Baghdad each year. However, critics have argued that this system gives the US significant influence over Iraq’s financial system.

US officials stated that the suspension of shipments was temporary, but did not specify what steps Iraq would need to take for deliveries to resume. Prime Minister Mohammed Shia al-Sudani has sought US support for a second term while navigating tensions with Iran-backed armed groups in Iraq.

Source: Al Jazeera