US Treasury Department officials recently blocked a delivery of nearly US$500 million in US banknotes – the proceeds of Iraqi oil sales – from accounts at the Federal Reserve Bank of New York, the Journal said.

Reuters could not immediately verify the report. The US Treasury Department and the Federal Reserve did not immediately respond to a request for comment.

Washington has also informed Baghdad it is suspending funding for some counter-terrorism and military training programs until militia attacks end and Iraqi authorities take steps to dismantle armed groups, the report added.

The United States earlier this month summoned Iraq’s ambassador after a drone struck a major US diplomatic facility in Baghdad, following a series of drone attacks that Washington has blamed on Iran‑aligned “terrorist militias.”