Iran demands $11 billion in gas debt from Iraq, rejects Saudi payment proposal

BAGHDAD, Iraq — Iran is pressing Iraq to repay an estimated $11 billion debt accumulated over years of Iranian gas imports, according to a report by Al Hurra television. Two Iraqi sources told the broadcaster that Baghdad had proposed paying $1 billion of the outstanding amount to Saudi Arabia on behalf of Iranian pilgrims, but Tehran rejected the arrangement and insisted the funds be transferred directly to Iran. The report said Iraq faces serious difficulties in settling the debt in cash and U.S. dollars because of U.S. sanctions on Tehran and the banking restrictions that accompany them. The $11 billion figure aligns with earlier assessments of Iraq's gas-related arrears to Iran, which have remained frozen because the funds cannot be moved under the sanctions regime. The mechanism of routing money through pilgrim-related accounts is not new, the report said, noting that similar arrangements have previously been used to release blocked Iranian funds in Baghdad for humanitarian or specific commercial purposes. Iraq has depended on Iranian gas and electricity to operate parts of its power grid for years, while Washington has increased pressure on Baghdad to reduce that reliance. Earlier in 2025, U.S. waivers that had allowed Iraq to make energy payments to Iran were removed as part of Washington's maximum pressure campaign against Tehran.