Reuters Report: Iran's Billion-Dollar Revenue from Oil Smuggling Network

Five informed sources told Reuters about the activities of a complex oil smuggling network in Iraq since the beginning of Mohammed Shia' al-Sudani's premiership in that country. According to these sources, this smuggling network generates at least one billion dollars annually for the Islamic Republic of Iran and its proxy groups. The five sources, along with three reports from Western intelligence agencies, stated that this smuggling network exploits one of the Iraqi government's policies. Under this policy, subsidized and very cheap fuel oil is made available to asphalt plants, and various individuals and dozens of companies and groups in Iran and Iraq participate in this process. According to Reuters, approximately 500,000 to 750,000 tons of heavy fuel oil, including high-sulfur fuel oil, equivalent to 3.4 million to 5 million barrels of oil, is extracted from asphalt plants and mainly exported to Asian countries. So far, no report has been made about the amount of fuel oil smuggled since Sudani's premiership and the involvement of several entities within Iraq in this illegal trade. Iranian and Iraqi officials did not respond to Reuters' request for comment on this matter. The Islamic Republic has significant military, political, and economic influence in Iraq through powerful Shiite militias and its supported political parties. Iraqi and American officials say that the Islamic Republic also secures currency from Iraq through exports and circumvents U.S. sanctions by using the banking system of that country. According to the five sources who requested anonymity, one route for the exit of fuel oil from Iraq involves mixing it with Iranian fuel oil and exporting it as an Iraqi product to other countries. These sources say that the Islamic Republic circumvents the stringent U.S. sanctions on its energy exports through this method and generates revenue. Iranian oil is sold at a lower price in the market due to sanctions, but this way, its value increases, and the revenue is available to the Islamic Republic. Another route involves exporting fuel oil provided by the Iraqi government at a subsidized price to asphalt plants in that country, which is sold with falsified documents through militias supported by the Islamic Republic, and they manage this smuggling route. Three of these sources told Reuters that between one and three billion dollars of oil is sold annually through these two smuggling routes. They added that this illegal trade potentially exposes Iraqi organizations and officials to U.S. sanctions for aiding the Islamic Republic, and some Iraqi officials are concerned that the incoming Trump administration may target them. These sources remind that, however, Iraqi leaders heavily rely on the support of influential Shiite groups backed by the Islamic Republic to remain in power, making it difficult for them to confront illegal activities such as fuel oil smuggling.