During Iraqi Prime Minister Ali al-Zaidi’s recent visit to Tehran, Iranian officials reportedly urged Baghdad to repay around $11 billion in outstanding debt from years of Iranian natural gas imports. Iraqi sources said Baghdad could not currently repay the full amount and proposed transferring $1 billion to Saudi Arabia to settle Iran’s Hajj-related obligations, but Tehran rejected the proposal and demanded direct payment.
The debt remains difficult to settle due to U.S. sanctions and banking restrictions that prevent the transfer of Iranian funds. Iraq has relied heavily on Iranian gas and electricity supplies for years, but U.S. pressure and the removal of payment waivers have complicated financial arrangements.
A key issue in the talks was also the safe passage of Iraqi oil tankers through the Strait of Hormuz, which is vital for Iraq’s oil-dependent economy. Iraqi officials sought guarantees from Tehran that Iraqi vessels would be exempt from restrictions, but no formal commitment was included in the final statement.
The disruptions in Hormuz have significantly affected Iraq’s oil exports and revenues. Iraqi officials estimated losses of $40–45 billion since the conflict began, while more than 90% of government revenues depend on oil exports, most of which transit the Strait of Hormuz.