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According to an exclusive report by Reuters, the Biden administration on Tuesday moved to let Iraq pay Iran for electricity via non-Iraqi banks, a US official said, a step Washington hopes may keep Tehran from forcing unpopular power cuts during the sweltering Iraqi summer.

Secretary of State Antony Blinken signed a 120-day national security waiver allowing Iraq - heavily dependent on Iranian electricity - to deposit such payments into non-Iraqi banks in third countries instead of into restricted accounts in Iraq, said the official who spoke on condition of anonymity.

Reuters, apparently quoting the official, said that funds put into the non-Iraqi banks, like those deposited into Iraqi banks, will also be restricted, still requiring US permission for Iran to get access to them and only for spending on humanitarian goods.

Tehran has in the past pushed Baghdad to secure US permission to release such funds by cutting Iranian natural gas exports to Iraq, limiting Iraq's ability to generate power, and forcing deeply unpopular electricity cuts.

Reuters said the change came at the request of the Iraqi government, apparently in the hopes that this might transfer some of the pressure that Iran has exerted on Baghdad to other countries.

But it is not clear if the change is not the result of an Iranian plan to gradually weaken the impact of US banking sanctions on its dealings with Iraq. Iran’s next move could be pressure on Iraq to ask the United States to lift all restrictions on the funds, enabling Tehran to withdraw cash dollars. The current Iraqi government has closer ties with Tehran than its predecessor.

"We have to help the Iraqis with this perennial pressure from the Iranians to access the money," the US official told Reuters.

"The Iraqis have requested, and now we have agreed, to expand the waiver," said the US official, adding that this might help ensure better compliance with the US requirement that any disbursements be for humanitarian purposes.

"It also helps the Iraqis, at least somewhat, to have an argument to make (to Iran) that they are not in control of the money that they have paid (into non-Iraqi accounts)," he added.

If this was a change resulting purely from an Iraqi-US agreement, it is not clear whether Iran might ease up on Iraq as a result. Tehran could decide it has greater leverage over Iraq than over other nations and continue to exert pressure.

Last week it was reported that Iraq was willing to barter oil with Iran instead of cash payments, which could also violate US sanctions.

Iraq exports at least four times more oil than Iran, with more than $100 billion annual revenues, but with its inefficient government and corruption it has not been able to tap its own natural gas to produce electricity.

Iran is under extensive US economic sanctions reimposed in 2018 after then-US President Donald Trump abandoned the nuclear deal that Tehran struck with major powers Britain, China, France, Germany, Russia and the United States in 2015.

Trump believed his policy of "maximum pressure" on Iran would force it to accept more stringent restrictions to its nuclear program, which the United States, European powers and Israel fear may be designed to obtain a nuclear weapon.

As a result of Trump's withdrawal from the deal and US President Joe Biden's failure to revive it, Iran could make the fissile material for one bomb in 12 days or so, according to U.S. estimates, down from a year when the accord was in force.

With exclusive reporting by Reuters

The official also said he sees a window of opportunity by the end of 2023 to try to negotiate a de-escalatory nuclear deal with Iran.

"We may have a small window of opportunity to try to resume discussions with them on (a) return to the JCPOA or at least to an agreement of de-escalation … before the end of the year,” the official told reporters in Washington, speaking on condition of anonymity.

In June, sources told Reuters there were three reasons to keep the sanctions in place: Russia's use of Iranian drones against Ukraine; the possibility Iran might transfer ballistic missiles to Russia; and depriving Iran of the nuclear deal's benefits given Tehran has violated the accord, albeit only after the United States did so first.

The United States has denied any movement toward a full or a partial deal with Iran.

Keeping the sanctions would reflect Western efforts to prevent Iran from developing nuclear weapons and the means to deliver them despite the collapse of the 2015 deal, which then-US President Donald Trump abandoned in 2018.

The crux of that pact, which Iran made with Britain, China, France, Germany, Russia and the US, limited Tehran's nuclear program to make it harder for it to get fissile material for a bomb in return for relief from economic sanctions.

As a result of Trump's withdrawal from the deal and US President Joe Biden's failure to revive it, Iran could make the fissile material for one bomb in 12 days or so, according to US estimates, down from a year when the accord was in force.

Reporting by Reuters

According to the Wall Street Journal, the US companies are reluctant to unload the oil due to concerns about potential Iranian reprisals.

“Companies with any exposure whatsoever in the Persian Gulf are literally afraid to do it,” said a Houston-based energy executive involved in the matter, citing worries “that the Iranians would take retribution against them.”

This impasse sheds light on the difficulties the US government encounters in enforcing sanctions against Iran, especially as Iran has escalated its attacks against Western shipping interests as a deterrent to interdicting Iranian exports.

These tactics are seen as Tehran's strategy to prevent the West from interfering in its economic activities, added the report.

The issue comes at a time when US diplomats are quietly attempting to restart negotiations with Iran over a nuclear accord.

“That vessel’s emblematic of a much bigger drama that’s playing out about how we deal with Iranian threats,” a former US official told WSJ.

Tehran's military forces have hijacked several Western tankers in recent months, seen as retaliation for Western seizures of Iranian oil.

Meanwhile, the US Defense Department said Monday that it is deploying F-35 jet fighters and a Navy destroyer to the Middle East as a measure to deter Iran from attempting further seizures and to address Russian aggression in the region.

According to Kayhan newspaper, affiliated with Supreme Leader Ali Khamenei's office, President Raisi is working on “extraterritorial cultivation, export of products such as drones and cars, petrochemical products, as well as technical exports".

The latest revelations will come as no shock, the barter deals of the heavily sanctioned regime the only way it can muddle through its current crisis, calling in favors from its dictatorial allies around the world from South America to Africa.

Iran has been providing drones to guerrilla groups across the Middle East for decades, and most recently, has supported Russia's invasion of Ukraine with hundreds of Shahed drones used in large scale missile attacks.

Only in March, Omar Hilal, Morocco’s ambassador to the United Nations, warned: “Iran, after undermining the stability of Syria, Yemen, Iraq and Lebanon, is in the process of destabilizing our region."

Concerns for Iran's involvement in Africa are also high. In October, the US State Department said Iran sent Ethiopia armed drones in the summer of 2021 in violation of a standing UN Security Council resolution.

The United States and its European allies have imposed a series of sanctions on Iranian individuals and companies involved with the drone program and shipments of the weapon to Russia.

Iran first denied it had supplied the drones but in early November foreign minister Hossein Amir-Abdollahian admitted the deliveries, while claiming they were sent before the Russian invasion.

The move announced after a phone conversation between the two leaders marks a shift in US - Israeli relations as most Israeli prime ministers had already received an invitation to the White House this far into their terms.

The two leaders shared a "long and warm" conversation, the Israeli statement said, focused on curbing threats from Iran and its proxies and strengthening the alliance between the two countries.

US National Security Council spokesman John Kirby said, “The two consulted on our close coordination to counter Iran, including through regular and ongoing joint military exercises. They noted that U.S. that the US-Israel partnership remains a cornerstone in preventing Iran from ever acquiring a nuclear weapon."

Netanyahu told the US President he would try to form "broad public consensus" on controversial legislation in Israel that would see its highest court stripped of much of its powers.

President Biden and his administration have voiced concern over Netanyahu’s government plans to overhaul the judicial system taking away some of the powers of unelected judges. This has led to a serious split among the public, with months of large protests by those opposing the plan.

Kirby said, "We believe strongly in the democratic institutions and the ideals of democracy that the United States and Israel represent, not just in their particular parts of the world, but across the world. And we want to see Israel be as vibrant and as viable democracy as possible.”