You can stretch this to define anything at all as military equipment. Oil, metal, iron ore. How about cash, you need cash to run a military. Food, an army marches on its stomach.
Remember, we are not talking about barrels of oil ready to be used in tanks, we are not talking about tanks of processed gasoline. We are talking about oil fields, natural resources. If you define that as military equipment then any natural resource, or manufactured resource for that matter, can be classified as military equipment.
How about gold? If a country has lots of gold and uses that gold to fund its military, is it ok for the U.S. to invade it and take that gold? Is the gold military equipment?
We are not talking about terrorists here. We are talking about the Iraqi government, the one that the U.S. helped set up after they took out Saddam.