US President Donald Trump and Iraqi Prime Minister Ali al-Zaidi announced a series of "massive" oil deals aimed at boosting jobs and oil production in both countries during al-Zaidi’s visit to Washington on July 14, 2026 [1, 2, 3]. Trump said, "Iraq has tremendous potential because of their oil and because of other things, but because of their oil, and we’re going to be doing a lot of deals." He added, "We’re going to create a lot of jobs for both countries, and we’re going to be taking out a lot of oil. A lot of oil is coming out." [1, 2]
Al-Zaidi, a political newcomer and businessman, is seeking US investment to develop Iraq's oil and gas sector as part of a broader economic engagement. Both leaders pledged to deepen economic ties and confirmed that the remaining US military presence in Iraq—fewer than 2,000 troops—would fully withdraw by September 30, 2026 [2, 3]. Alongside this, al-Zaidi committed to disarm armed paramilitary factions in Iraq by the same deadline [2, 3].
US Secretary of Defense Pete Hegseth emphasized the importance of disarming Iran-aligned militias blamed for attacks on US forces. He warned, "Iraq must assert its sovereignty and disarm the Iran-aligned militias," highlighting ongoing US pressure on Baghdad to bring these groups under government control [3]. These paramilitary groups, including Saraya al-Salam, Asaib Ahl al-Haq, and Kataib Imam Ali, have agreed in recent months to disarm or end their affiliations with Iran-backed militias [4].
The Popular Mobilization Front militias, Iran-supported and blamed for attacks on US troops, number roughly 240,000 fighters and receive an estimated $3.5 billion annually in funding [4]. US officials are threatening sanctions and withholding oil revenues if Iraq fails to disarm these militias [4]. Senator Marco Rubio noted, "You can't have the end of hostilities and conflicts in the region as long as Iranian proxies are launching missiles and drones from Iraq and are participating in terrorism." [4]
Iraq is navigating a difficult balance between US and Iranian interests amid ongoing tensions that shape its political and oil strategies [1, 3]. Reports suggest Iraq may seek an International Monetary Fund loan of up to $8 billion as part of broader economic engagement with the US and international institutions [3].
The troop withdrawal and paramilitary disarmament deadline of September 30, 2026, sets a firm end date for US combat presence and internal security reforms in Iraq, marking a critical juncture in bilateral relations.
