U.S. influence in Iraq is expanding through renewed energy investment and political leverage, yet Baghdad’s ongoing alignment with Tehran continues to complicate Washington’s strategic goals.
Major oil firms such as ExxonMobil, Chevron and BP have returned to Iraq under contract terms far more favorable than those that drove Western companies out a decade ago, and Baghdad has actively courted this investment as a hedge against regional instability.
Politically, the Iran‑aligned Shia coalition still controls both the Oil and Finance ministries, and a deputy oil minister is alleged to serve as Tehran’s interlocutor within the ministry.
The Popular Mobilization Forces, a predominantly Shia paramilitary umbrella formally part of Iraq’s armed forces, remain armed, state‑funded and largely loyal to Iran’s Supreme Leader, operating outside Baghdad’s effective control.
This institutional split allows American energy companies to make progress inside a structure still substantially governed by Iran‑aligned factions, making the durability of commercial gains dependent on political realignment.
Iraq’s post‑2003 power‑sharing convention allocates the premiership to a Shia Arab, the presidency to a Kurd and the parliamentary speakership to a Sunni Arab, though Shia Arab parties have held dominant positions since its inception.
Current Prime Minister Ali al‑Zaidi, a Shia, assumed office on 16 May 2026 after the Shia coalition managed the selection process, emerging as a consensus candidate.
Sunni and Kurdish parties retain meaningful but lesser representation; the Al‑Azm Alliance holds cabinet and parliamentary seats, and in April 2026 the Council of Representatives elected Kurdish nationalist Nizar Amedi as president.
International estimates place Iraq’s population at 46‑48 million, with Arabs comprising roughly 75‑80 %, Kurds about 17 %, Shia Muslims 60‑65 % and Sunni Muslims 32‑37 %; the Christian community has dwindled to between 150,000 and 500,000.
Because Shia Arabs form the largest demographic and political bloc, they secure the premiership and maintain structural advantage for Iran‑aligned parties, even when individual governments seek independence.
Kurdish politics is split between the Kurdistan Democratic Party, which controls Erbil and Duhok and is led by Nechirvan Barzani, and the Patriotic Union of Kurdistan, based in Sulaymaniyah and historically linked to the federal presidency.
The PMF was formed in June 2014 following a religious fatwa calling for arms against the Islamic State, and it was formally incorporated into Iraq’s armed forces in December 2016.
Today the PMF comprises roughly 60‑70 brigades and more than 230,000 personnel with an annual budget near $3.6 billion, but its leadership and operational capacity remain concentrated among Iran‑aligned factions.
Key PMF factions include Kata’ib Hezbollah, Asa’ib Ahl al‑Haq, the Badr Organization, Harakat al‑Nujaba and Kata’ib Sayyid al‑Shuhada, all maintaining close ties to Iran’s Revolutionary Guard.
PMF‑linked militias have directly targeted Kurdish interests, exemplified by a March 2026 drone strike on the Dohuk home of KRG President Nechirvan Barzani, continuing a pattern of attacks dating back to 2015.
Baghdad’s relationship with the PMF is one of tolerance bordering on de facto support rather than genuine control, a reality acknowledged by senior officials who doubt the government can rein in the militias without risking confrontation.
During the 2026 conflict, Iran‑aligned militias launched over 500 attacks from Iraqi territory against U.S. facilities, and Iraq’s national security cabinet authorized the militias to defend themselves after a U.S. strike killed PMF personnel.
The oil sector mirrors this political split, with the Shia coalition running the Oil and Finance ministries and allegations that a deputy oil minister acts as Iran’s key interlocutor.
U.S. sanctions have targeted Iraqi oil officials for diverting oil to Iran‑affiliated smuggling networks, and the newly appointed communications minister is reported to have links to Kata’ib Hezbollah and other Iran‑aligned figures.
Prime Minister al‑Zaidi, a political newcomer and businessman, secured his position with explicit U.S. backing, and Washington imposed a red line barring affiliates of designated militia groups from cabinet posts.
In January 2026, Tehran‑favored Shia leader Nouri al‑Maliki was nominated for the premiership, but the nomination gave way to al‑Zaidi, illustrating both Tehran’s influence and its limits.
Overall, Iranian influence in Iraq remains substantial but contested, while the United States retains leverage through control of oil export revenues, sanctions authority and a residual military presence.
The long‑term success of U.S. oil companies will depend less on contract terms than on Washington’s ability to weaken the political networks that enable Tehran’s operations in Baghdad, with the broader U.S.–Iran conflict serving as a critical wildcard.
