Swap of Iraqi refined products for Iranian gas could help settle an $11 billion debt but also risks friction with U.S. over sanctions.
Iraq has activated a new mechanism for making payments to Iran for gas imports in an apparent attempt to settle billions of dollars in debts that have accumulated because of U.S. sanctions and banking restrictions.
Under the new deal, Iran is nominating companies to load refined products from refineries in Iraq, according to three senior Iraqi officials familiar with the structure of the agreement. When those products are sold, buyers pay Iran rather than Iraq, and the amounts are deducted from Iraq's debt to Iran.