The Trade Bank of Iraq is expected to stop processing payments to Iran if US sanction exemptions expire next month, Agence France-Presse reported Tuesday. The bank is used by Iraq to pay for Iranian gas imports that are used to power the country’s electricity grids. About a third of Iraq’s electricity supply relies on Iran.

“We’ll stop. As simple as that,” the head of the bank, Faisal al-Haimus, told the news agency, adding that the bank will not pay for or deal with any Iranian entity over gas or electricity.

Why it matters: The statement comes amid escalating US-Iran tensions. In 2018, Washington ordered sanctions on Iran’s energy sector but has granted Iraq temporary waivers to continue Iranian imports over the last 15 months. 

US sanctions against Iran have severely impacted Iranian energy exports and stopping payments from Iraq could cause further concerns. Iranian President Hassan Rouhani said in December that Iran lost $200 billion from US sanctions and Iranian Supreme Leader Ayatollah Ali Khamenei earlier this month said the country’s reliance on oil revenues needs to stop.