U.S. Sanctions Iraqi Oil Official as DOJ Probes $2.6B Trades

On Thursday, the U.S. Treasury’s Office of Foreign Assets Control designated Iraq’s Deputy Oil Minister Ali Maarij Al‑Bahadly and several Iran‑backed militia figures while the Justice Department and Commodity Futures Trading Commission opened reviews into a cluster of large, bearish oil trades placed shortly before public announcements that reduced tensions in the 2026 Iran conflict.

OFAC said the designations, made under Executive Order 13902, allege Al‑Bahadly used his ministry roles since 2018 to benefit an Iran‑linked smuggler and the Asa’ib Ahl Al‑Haqq militia. The agency described a scheme in which Iranian crude was blended with Iraqi barrels at the VS Oil Terminal and provenance documents were falsified before export. Three senior militia figures and four oil‑services firms were also added to the sanctions list. The designations allow the U.S. to block property and bar transactions with the named people and companies.

U.S. regulators are examining roughly $2.65 billion in bearish derivatives positions that were entered minutes to hours before several public de‑escalation announcements. Market data under review shows a $500 million position placed about 15 minutes before a March 23 postponement of strikes, a $960 million wager entered hours before an April 7 ceasefire announcement, a $760 million bet placed roughly 21 minutes before an April 20 de‑escalation statement, and a $430 million trade ahead of an April 21 truce extension. Investigators have not publicly identified the traders involved.

Department of Justice and CFTC staff are assessing whether the timing and size of the trades indicate trading on nonpublic information tied to presidential or government decisions. Prosecutors are reviewing communications and transaction records to determine if any participants profited from restricted briefings or other nonpublic sources and whether criminal statutes were violated. The reviews are at stages where subpoenas, requests for records and interviews are common.

Treasury Secretary Scott Bessent described the alleged asset diversion in stark terms: “Like a rogue gang, the Iranian regime is pillaging resources that rightfully belong to the Iraqi people.”

Treasury officials said the sanctions are part of Operation Economic Fury, an effort to constrain Iran’s access to revenue and to disrupt networks that facilitate oil exports and financial transfers. The campaign has included earlier actions that froze $344 million in tethered tokens and seized nearly $500 million in crypto assets linked to Iran.

Market surveillance units have increased monitoring of both physical oil movements and derivatives markets since hostilities escalated. Regulators are also comparing the suspicious trades to activity on prediction markets and cryptocurrency platforms, where certain wallets recorded repeated gains on Iran‑related outcomes ahead of public statements. No criminal charges have been announced in connection with the trades or the oil‑smuggling allegations, and the OFAC listings create an administrative enforcement path that can restrict the international operations of the designated actors.