ERBIL, Kurdistan Region of Iraq - Iraqi Prime Minister Mohammed Shia' al-Sudani on Saturday directed the formation of a "high-level" investigative committee to investigate reports of oil mixing and smuggling in Iraqi ports and territorial waters.

Iraq has recently faced allegations of Iranian oil being mixed with Iraqi exports to circumvent US sanctions on Tehran, with the US State Department on Tuesday announcing the imposition of new sanctions on entities accused of smuggling Iranian oil through the country.

On the same day, SOMO Director and Chairman Ali Nazar al-Shatari, speaking to Iraqi state media, denied any mixing or smuggling of oil in Iraqi ports or the country's territorial waters, saying that "oil tankers are subject to real-time monitoring from the time they are loaded until they arrive at the refineries."

In a statement, Sudani’s office wrote that the premier directed “the formation of a high-level investigative committee from the relevant authorities to investigate the information received regarding suspicions of corruption in the mixing and smuggling of crude oil and petroleum products, whether in Iraqi ports or within territorial waters.”

The prime minister urged investigating authorities to show “no leniency” when conducting their work, adding that the committee is to submit their findings and recommendations to the Iraqi Council of Ministers upon completion of their work.

The Iraqi cabinet will then “take appropriate measures, in accordance with the law, in a manner that ensures support for the national economy and protection of public funds,” the statement from Sudani’s office concluded.

After announcing an earlier bout of sanctions in July, the US State Department said that companies operating in Iraq are “smuggling Iranian oil disguised as, or blended with, Iraqi oil,” adding, “We will not hesitate to utilize all available tools at our disposal to counter those who enable Iran’s illicit oil trade.”

The New Region in July reported that US sanctions targeting Iran-backed oil smuggling networks led to the suspension of operations at Berth 41 of Khor al-Zubair Port in Basra province, with lawmakers and economists warning that such illicit activity can harm Iraq's international standing and damage investor trust.

Economist Nizar Mohi said what happened at Berth 41 is a serious problem in the country’s economic management system. He said Iraq may face more sanctions unless it changes how it manages sovereign ports and facilities.

Nasser al-Kanani, an economic affairs specialist, also told The New Region in July that illegal oil exports are a “serious violation of national sovereignty” and are causing “major economic losses.”

“The increasing oil smuggling, either across the border or by manipulating export contracts, doesn’t just harm Iraq internally,” Kanani said. “It also puts Iraq’s position in global oil markets at risk and may lead to sanctions that would hurt national revenues and slow down reconstruction.”

US President Donald Trump in early February, shortly after beginning his second term in the Oval Office, announced that he would recommence Washington’s “maximum pressure” campaign against Iran, imposing a host of new sanctions against Iranian oil exports in a bid to harm its foe’s economy and mitigate against its regional influence.