US lifts sanctions on Iraqi airline linked to Iran's IRGC: What to know

The airline was previously sanctioned for “providing assistance” for the IRGC and its proxy groups in Iraq, Syria and Lebanon.

WASHINGTON — The US Treasury Department on Wednesday lifted sanctions on Iraqi carrier Fly Baghdad and two of its aircraft, reversing a 2024 designation alleging that the airline had supported Iran's Islamic Revolutionary Guard Corps' Quds Force, as Washington and Tehran appear to be nearing an agreement to reopen the Strait of Hormuz.

What happened: The Treasury's Office of Foreign Assets Control (OFAC) removed Fly Baghdad Airlines, along with its aliases Iraq Express and Fly Baghdad, from its Specially Designated Nationals (SDN) list. It also delisted two Boeing 737 aircraft associated with the airline.

The airline and its aliases had previously been designated over alleged links to the IRGC’s overseas operations arm, the Quds Force, which Washington designates as a foreign terrorist organization. The original notice, announced in January 2024, said the airline was being listed “for providing assistance to the Islamic Revolutionary Guard Corps–Quds Force (IRGC-QF) and its proxy groups in Iraq, Syria, and Lebanon.”

Wednesday’s notice did not explain why the airline and aircraft were removed from the sanctions list. OFAC delisting notices typically do not provide reasons for such actions.

Why it matters: The move comes as US and Iranian officials signal that they are nearing an agreement to reopen the Strait of Hormuz following weeks of disruption. Iran has consistently said that any broader understanding with Washington would require relief from US sanctions.

US President Donald Trump told reporters Tuesday night that Iran and the United States had held “very good discussions” that day. He added that a deal “could happen tomorrow or the next day,” meaning Wednesday or Thursday.

Speaking to Fox News on Tuesday night, Trump warned, “If they [Iran] back out again, they are going to get hit really hard.”

Although Iranian officials have not confirmed talks with the United States, they have confirmed negotiations with Oman, which borders the Strait of Hormuz alongside Iran.

Know more: Reuters reported Wednesday that a proposed arrangement between Iran and Oman would give Tehran control over ships entering the Gulf through the Strait of Hormuz, citing a senior Iranian source and two regional officials. The sources also disputed Trump’s claim that an agreement to reopen the waterway was imminent, according to the report.