During the Iraqi prime minister’s visit to Tehran, Iran pressed the Baghdad government to pay $11 billion in accumulated natural gas debt. Sources close to the Iraqi government and an Iraqi diplomat said Iranian officials insistently raised this demand.
Hajj expenses proposal rejected
The Baghdad government proposed transferring $1 billion of the debt to Saudi Arabia to cover Iran’s Hajj expenses. However, Tehran rejected the offer, insisting that the money be paid directly to them.
Strait of Hormuz safe passage guarantee withheld
During the visit, Iraq also sought assurances from Iran for the safe passage of oil tankers through the strategic Strait of Hormuz. According to one source, Iranian President Masoud Pezeshkian said Iranian authorities recommended exempting Iraqi vessels from restrictions. However, Iranian officials rejected the request to include this commitment in the joint statement issued after the visit.
The US revocation of a sanctions waiver for energy payments to Iran in early 2025 further complicated financial transactions between the two countries. Iraq had previously used frozen Iranian funds for limited purposes such as Hajj expenses.