How the US controls Iraq's oil revenues
The arrangement gives Washington leverage over Baghdad and helps limit dollar flows to Iran-allied groups, officials said, as oil provides about 90% of Iraq’s budget.
- The New York Federal Reserve holds Iraq's oil revenues, granting Washington significant leverage over Baghdad; this structural dependence affects regional dynamics involving Iran, as Iraq relies on oil for about 90% of its budget.
- Following the 2003 invasion, the Coalition Provisional Authority established the Development Fund for Iraq at the New York Fed, creating an enduring financial link between Washington and Baghdad to manage oil wealth.
- Baghdad discontinued its long-running dollar auction system in early 2025 after sustained US pressure, targeting alleged siphoning of currency to Iran-allied groups and forcing the Central Bank to limit dollar supplies.
- Washington reportedly threatened to cut access to Federal Reserve funds when Iraq requested troop withdrawals in 2020, forcing Baghdad to back down and demonstrating the ability to restrict liquidity to influence political decisions.
- US forces are set to withdraw on Wednesday from their last bases in Iraq, a departure celebrated by Iran, where 4,500 Americans died during two decades of war; President Donald Trump has kept Iraq caught in the crossfire.
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This Wednesday, the last US armed forces must leave Iraq. This is a first since the American invasion of Iraq in 2003: this 30...
The U.S. troops are leaving Iraq completely, but Washington continues to control the country's oil money and no change is foreseen.
The most important question that arises after the withdrawal of American troops from Iraq is whether, as those forces withdraw, has America's hand cut short of Iraq's oil revenues?
How the US controls Iraq's oil revenues
US forces are set to withdraw on Wednesday from their last bases in Iraq, a departure celebrated as a victory by Iran and its allies, which have deep influence in the country where 4,500 Americans died during more than two decades of war.
Explained: How the US controls Iraq's oil revenues
US troops are set to leave their last bases in Iraq, but Washington will retain significant economic leverage through Iraq’s oil revenues, which remain held at the Federal Reserve Bank of New York. The arrangement supports financial stability and dollar access, but has also given the US influence over Baghdad and helped enforce pressure on Iran-linked financial networks.
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