Iraq’s prime minister speaks to Trump as oil rises on fears of renewed Iran strikes

Iraqi Prime Minister Ali al-Zaidi spoke by phone with US President Donald Trump on Thursday and told him Baghdad will not allow its territory to be used to attack neighbouring countries, Al Jazeera reported. The call came as diplomats work to head off fresh US attacks on Iran in the wake of the American midterm elections.

According to al-Zaidi’s office, the two men discussed the changing regional picture, security developments and prospects for “the next phase”. The prime minister repeated Iraq’s call for respect for state sovereignty and stressed the need for dialogue and diplomacy to protect stability in the region.

Baghdad warns armed groups

Foreign Minister Fuad Hussein, speaking to Dijlah TV the same day, said the possibility of renewed US military action against Iran is “not a secret”. He cautioned Iraqi armed groups against joining any Iranian retaliation. “Pushing Iraqi society into the war will lead to a disaster,” he said, adding that neither the public nor the armed forces are ready.

Hussein argued that Iraq was turned into a battlefield once the US struck Iran, with attacks coming from Washington, from Tehran and from factions inside the country. “We are not part of any axis,” he said, calling for a clear policy that Iraq stays out of the conflict.

Al Jazeera noted that Iraq has struggled to balance US and Iranian interests since Trump launched the war in February. Al-Zaidi, who took office in May, has made disarming all armed groups a priority, including powerful pro-Iran factions that carried out attacks across the region during the fighting.

The economic stakes are high. Al Jazeera said Iraq has lost more than $60bn in oil revenue since the war began, because about 90 percent of its crude exports normally pass through the Strait of Hormuz, which was largely cut off when Tehran closed it. Oil makes up about 90 percent of the federal budget. Iraq is one of the few countries Iran has allowed to move freely through the waterway.

Oil reacts

Markets are watching the same risk. CNBC reported that Brent crude futures rose 1.67% to $99.90 a barrel on Friday, while US West Texas Intermediate gained 1.43% to $91.69. Investors were assessing whether the end of the midterm campaign could clear the way for renewed action against Iran and endanger Middle Eastern supply.

Bob McNally, founder and president of Rapidan Energy Group, told CNBC’s “Squawk Box Asia” he sees an 80% probability that fighting resumes, which could lift both benchmarks above $100. He said Trump is determined to stop Iran acquiring a nuclear weapon, while Tehran is unwilling to give up its capabilities, so the escalation dynamic persists. CNBC said analysts at Lombard Odier, including chief economist Samy Chaar and investment strategy head Luca Bindelli, share that view.

There are also signs of a diplomatic track. Reuters reported, citing a senior Iranian official, that Iran sent a nuclear proposal to Washington through Qatar. Meanwhile Iran reported three further attacks on oil tankers in the Strait of Hormuz on Thursday, and UK Maritime Trade Operations data indicated that attacks on vessels were continuing at a near-record pace, CNBC said.

What is still unclear

Euronews, previewing its Friday programme, said it would examine from Doha how Gulf states are reacting to the midterms and whether a new US attack on Iran can still be avoided, under a headline saying Trump is weighing strikes. None of the outlets reported a decision, and whether the Qatari channel can ease the standoff remains open.