US Treasury lifts sanctions on Iraqi airline Fly Baghdad and two aircraft previously linked to Iran's IRGC

Aug 5, 2026

The US Treasury Department has lifted counterterrorism sanctions on Iraqi commercial carrier Fly Baghdad and two of its Boeing 737 aircraft, citing operational changes. While US officials describe the delisting as a routine administrative action, the move coincides with intense diplomatic efforts to reopen the Strait of Hormuz. Iran continues to condition a full reopening of the strategic waterway on the release of $24 billion in frozen assets and the lifting of US oil sanctions, following President Trump's cancellation of a major planned military strike in the region.

IRGC-linked sanctions lifted

▪The United States Department of the Treasury modified the sanctions listing for Fly Baghdad CEO Basheer Abdulkadhim Alwan Al-Shabbani, keeping him under active sanctions but attributing his designation directly to the Islamic Revolutionary Guard Corps-Quds Force rather than the airline.
▪United States Treasury officials stated that the delisting of Fly Baghdad does not represent any shift in United States policy toward the Iranian government or the Islamic Revolutionary Guard Corps-Quds Force.
▪The two Fly Baghdad aircraft removed from the Specially Designated Nationals List on August 5, 2026, bear the tail identifiers YI-BAF and YI-BAN.
▪A United States Treasury official stated that Fly Baghdad was delisted after completing an administrative review process and demonstrating major operational changes that addressed its prior sanctionable conduct.
▪The United States Department of the Treasury's Office of Foreign Assets Control removed Iraqi commercial airline Fly Baghdad and two of its Boeing 737 aircraft from the Specially Designated Nationals List on August 5, 2026.

US-Iran peace talks

▪United States President Donald Trump stated on August 4, 2026, that the United States and Iran held very good discussions and that a deal could happen very soon.
▪United States Secretary of State Marco Rubio confirmed on August 3, 2026, that progress has been made in talks with Iran regarding the reopening of the Strait of Hormuz.

Strait of Hormuz reopening

▪Iranian Deputy Foreign Minister Majid Takht-Ravanchi stated that a broader reopening of the Strait of Hormuz is contingent on the United States fulfilling its commitments regarding sanctions relief, lifting the naval blockade, and releasing frozen assets.
▪Iran and Oman reached a bilateral understanding on a new commercial navigation corridor through the Strait of Hormuz that routes commercial vessels primarily through Omani territorial waters instead of the existing northern route near Lark Island.

Iran frozen assets demand

▪Iran has conditioned its cooperation in diplomatic talks on the release of $24 billion in frozen Iranian assets and the lifting of United States sanctions.
▪A 14-page draft memorandum reported by Iranian state media outlined a framework where the United States would lift oil sanctions and Iran would commit to reopening the Strait of Hormuz within 30 days.

Trump strike cancellation

▪United States President Donald Trump revealed on August 2, 2026, that Saudi Arabia, the United Arab Emirates, Qatar, and Iran had all requested that he cancel a massive planned military strike.
▪The planned military strike that United States President Donald Trump canceled over the weekend of August 1-2, 2026, was described by Trump as the largest planned strike since World War II.