The return of Donald Trump to the White House after the 2024 elections in the US has changed the calculus in Teheran. Reeling from the consequences of the tit-for-tat with Israel during the latter’s war in Gaza (itself a consequence of the attack carried out by Hamas on the 7th of October 2023), Iran has already seen its so-called Axis of resistance severely diminished and increasingly vulnerable to Tel Aviv and Washington’s retaliation. Furthermore, the resumption of the maximum pressure campaign following the National Security Presidential Memorandum (NSM-2) issued on the 4th of February 2025 by the Trump administration is expected to further punish the Iranian government and counter its malign influence.
The regional repercussions of these moves are likely to be felt particularly in Iraq, where Teheran and Washington are jockeying for influence ever since the US invasion of 2003 and the subsequent fall of Saddam Hussein. Local armed groups close to the Iranian Revolutionary Guard Corps, that have been involved in attacks against American and Israeli targets, are expected to bear the brunt of this policy change, as the Trump administration seeks to roll back the Iranian influence in Baghdad. Concerned by the collapse of the Assad regime in Syria and the potential resurgence of the Islamic State, some of them have already adopted a more cautious approach towards the US’ presence.
Implementing its strategy of draining Iran out of Iraq, Washington is not refraining from using the economic leverage. Pressure from the US Department of the Treasury has led the Central Bank of Iraq to ban five local banks from engaging in US dollar transactions to prevent money laundering and smuggling. Eight other banks have been already banned last year, in a move considered part of the ongoing crackdown against Teheran’s attempt to circumvent sanctions using Iraq to smuggle fuel and receive hard currency for its beleaguered economy. The extent of the sophisticated scheme to smuggle fuel oil from Iran and blend it with a similar Iraqi product has been uncovered in December.
Cooperation with Prime Minister Mohammed Shia al-Sudani, in power since 2022, is deemed essential to turn the screws on Iran and its proxies. In this context, the planned reopening of the Kirkuk-Ceyhan oil pipeline (closed since 2023 over a payment dispute between central authorities in Baghdad, the Kurdistan Regional Government and Türkiye) is certainly another big piece of the puzzle. Oil exports from Kirkuk (where British Petroleum has recently won contracts to redevelop oil and gas fields) would help offset in part the output reduction in Iran after the return of the maximum pressure campaign; it will also make Iraq less energy dependent on Teheran, a clear goal of the Trump administration. On the other hand the Kirkuk-Baniyas Iraq-Syrian pipeline, shut down since decades, is not considered a high priority by the new government in Damascus.
The main beneficiary of this policy seems to be once again Türkiye, which sees in the resumption of the oil flow from Kirkuk to Ceyhan Limani a clear boost to its ambitions to become the main energy hub in the East Mediterranean. Galvanised by the fall of Bashar al-Assad and the call by jailed Kurdish leader Abdullah Ocalan on fellow PKK militants to lay down their arms, Ankara is more than willing to reinforce ties with Baghdad, also considering their shared interests in the Iraq Development Road project, an alternative to the India-Middle East Europe Economic Corridor. A partnership that could further exacerbate Iran’s isolation and complicate tense relations between Ankara and Teheran, even if existing Iranian roads may easily connect with the Iraq Development Road.
