Oil is considered a key factor in restructuring relations between Iraq and the United States. During Ali Al-Zaydi's first visit to the White House in July, Donald Trump clearly stated that with the withdrawal of American forces by September 30, US oil companies must replace them.
Challenges in Attracting Foreign Investment
Rebuilding trade and investment relations between the two countries is essential, but implementing these changes faces challenges. Al-Zaydi must consolidate his power in a political system still influenced by Iran while convincing foreign investors that Iraq can provide a secure and profitable operating environment.
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The timing for these changes is very sensitive. With ongoing external pressures from the conflict between the United States and Iran and the move towards disarming Iran-affiliated militias, Al-Zaydi's government has a limited opportunity to attract American investments in the oil sector and secure US support for diversification of export routes. This issue has become critically important after Iran's closure of the Strait of Hormuz and the exposure of Iraq's oil-dependent economy's vulnerabilities.
History of US-Iraq Relations
Over the past two decades, US policy towards Iraq has been influenced by security issues. After the invasion of Iraq in 2003, US ambitions to build a new government were altered by the emergence of insurgencies and sectarian conflicts. The withdrawal from Iraq in 2011 created further limitations, and the battle against ISIS and the rise of militias reduced Iraq to a part of the US's broader policy towards Iran.
Al-Zaydi has committed to shifting relations from crisis management to creating opportunities. Although previous Iraqi leaders also attempted to restructure relations, the current US-Iran war makes this balance seem severely unattainable.
Iraq hopes to manage these challenges with the return of major US oil companies, such as ExxonMobil and Chevron, to key projects like the Majnoon oil field and the West Qurna-2 field. This move could not only help strengthen relations with Washington but also revive the reputation of Iraq's oil sector, which has stagnated in recent years.
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