Iraq's oil revenues under US financial guard 23 years after invasion
Shafaq News
President Donald Trump's renewal in May 2026 of the national emergency on Iraq passed with little fanfare in Washington, the twenty-third such extension since 2003. Inside Iraq, it reopened a recurring dispute: whether the United States holds Iraqi oil money, or merely guards it. A fresh parliamentary inquiry to the oil ministry, demanding answers on a reported export deal with Washington, has pushed that dispute back into public view and exposed how little has changed in more than two decades.
The financial arrangement dates to the weeks following the 2003 invasion. UN Security Council Resolution 1483, adopted on May 22, 2003, required Iraq's oil and gas export revenues to be deposited into the Development Fund for Iraq, with 5% set aside for reparations to Kuwait. In practice, the fund was held at the Federal Reserve Bank of New York under international oversight. The same day, President George W. Bush issued Executive Order 13303, shielding the fund and Iraqi oil revenues from legal attachment to protect reconstruction money from creditors pursuing claims dating to Saddam Hussein's era.
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Mohammed Al-Hasani, a financial expert, told Shafaq News that the structure protects Iraqi money rather than appropriating it. Export revenues are deposited at the Federal Reserve under the management of the Central Bank of Iraq, he said, a setup whose purpose is “to shield the funds from lawsuits and asset-freezing abroad, not to place them at Washington's disposal.” The annual renewal, in his reading, is procedural. The money stays Iraq's and finances the state budget once the required financial steps are complete.
He noted that all of the Central Bank's external accounts currently sit at the Federal Reserve, and that in modern history the United States has never seized central bank deposits held there.
The extraordinary legal shield created after the 2003 invasion was largely dismantled in 2014. President Barack Obama's Executive Order 13668 ended the seizure protections that had covered the Development Fund for Iraq, Iraqi oil revenues, and the Central Bank of Iraq's accounts. But the national emergency declared in 2003 survived that change and has been renewed by every US president since. What began as a temporary postwar safeguard has become a standing emergency framework that no administration has chosen to end.
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For Nawar Al-Saadi, a professor of international economics, that persistence is the real story. The renewal imposes no new American tutelage, he told Shafaq News, but extends a legal framework rooted in 2003. Two decades on, remaining inside it sends a signal that Iraq's economy is still bound to a structure born of war.
“The problem is not whether Washington is seizing the money but why Iraq still depends on external protection for its own assets, and what that says about the completeness of its financial sovereignty,” he said, pointing to the task ahead, which is “building legal and financial institutions strong enough to let Iraq leave the arrangement while keeping its assets shielded abroad.”
Iraq’s foreign currency reserves stood at $97.433 billion at the end of 2025, down from $100.367 billion a year earlier and $111.736 billion in 2023, according to Central Bank of Iraq figures. The reserves remain large, covering roughly a year of imports, but the buffer has narrowed as fiscal pressures grow. Much of Iraq’s oil-dollar system still runs through US-linked financial channels, giving Baghdad less room to manage its dollar liquidity freely.
The IMF warned in May 2024 that without policy adjustment, Iraq’s risk of medium-term sovereign debt stress was high. At the time, the Fund highlighted that Iraq’s fiscal breakeven oil price had climbed to around $84 a barrel in 2024 from $54 in 2020, underscoring the severe strain on a state where oil provides about 90% of government revenue.
Saudi Arabia shows what an exit looks like. Its central bank, SAMA, held $746 billion in reserves at a 2014 peak; by December 2023 those holdings had fallen to $434.6 billion, as Riyadh shifted assets into the Public Investment Fund and the National Development Fund, which together manage hundreds of billions in diversified global holdings. Saudi oil money increasingly moves through vehicles that answer to Riyadh, not to New York. Iraq has built no comparable channel.
Hussein Al-Askari, an Iraqi economic analyst, told Shafaq News that all proceeds from Iraqi oil sales land in the Federal Reserve account rather than in any bank inside Iraq. That account, he said, falls under US administration and Treasury oversight, and the yearly renewal of the emergency keeps Washington's hold on the framework intact. Where Al-Hasani sees custody, Al-Askari sees control, a gap that the official answer does little to close.
The renewed parliamentary inquiry reflects the same unease. The questions put to the oil ministry, pressing for detail on a reported plan to supply the US Strategic Petroleum Reserve and to create a joint energy fund, signal a governing Coordination Framework under domestic pressure to show independence from Washington.
Read more: Iraq's energy vulnerability: When apetro-state has no buffer
Exiting the Federal Reserve arrangement would require more than a political decision. Iraq cannot move its reserves to London or Tokyo without first securing the same protection from seizure that the current setup provides, which means finding other central banks or international institutions willing to guarantee it, and absorbing the costs of the switch. A government consumed by coalition management and falling oil prices has shown no appetite for that work.
Written and edited by Shafaq News staff.
