US Lifts Sanctions on Some Iranian Oil
The US has lifted sanctions on certain Iranian oil supplies as it seeks to mitigate the impact of the ongoing war in Iran on global energy markets.
Treasury Secretary Scott Bessent announced the issuance of a narrowly tailored, short-term authorization allowing the sale of Iranian oil currently stranded at sea.
This decision represents a significant reversal of longstanding US policy, though its effectiveness remains uncertain.
Experts have indicated that the move is likely to have a limited effect on energy prices and may result in increased funds flowing to the Iranian regime, which the US opposes. Globally, energy prices are surging as the conflict disrupts shipping routes and production capabilities.
Details of the Authorization
On Friday, Bessent stated that the permit applies to the sale of crude oil and petroleum products of Iranian origin currently loaded on vessels. The Treasury Department specified that the authorization will remain in effect until 19 April.
The Treasury Secretary estimated that this measure could quickly introduce approximately 140 million barrels of oil into global markets.
Prior to the conflict, China was the primary purchaser of Iranian oil, acquiring barrels at a significant discount due to sanctions imposed by the US and other nations.
Potential Impact and Concerns
In a Fox Business interview on Thursday, Bessent suggested that the waiver on sales restrictions could help redirect more of these supplies to countries in need of oil, such as India, Japan, and Malaysia, while compelling China to pay "market price."
However, Bessent did not elaborate on the operational details of the waiver or whether it would include safeguards to prevent proceeds from sales from benefiting the Iranian government.
"To put it mildly, this is bananas," said David Tannenbaum, director of Blackstone Compliance Services, a consultancy specializing in maritime sanctions, in an interview with the BBC on Thursday. "Essentially we're allowing Iran to sell oil, which could then be used to fund the war effort."
When questioned about the proposal, President Donald Trump did not provide a definitive response, stating on Thursday, "we will do whatever is necessary to keep the price."
Experts have cautioned that the waiver is unlikely to significantly influence prices.
"I don't think it's a game changer and it raises a whole lot of questions," said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, a think tank, on Thursday.
Ziemba expressed skepticism about the US government's ability to prevent oil sale revenues from reaching Iran's government, despite the desire to do so.
"The US government is definitely in an every-barrel-counts situation because of the scale of the supply shock," she added. "They're looking to find additional oil wherever they can."
Additional US Efforts to Boost Supply
The US has undertaken other measures to increase oil supply, including releasing millions of barrels from reserves and suspending some sanctions on Russian oil last week.
The latter decision drew criticism from European leaders, who argued it would strengthen Vladimir Putin's regime and prolong the war in Ukraine.
Impact of the Conflict on Global Oil Supply
Approximately one-fifth of the 100 million barrels of oil consumed daily worldwide typically transit the Strait of Hormuz, which borders part of Iran's coast. Since the war began at the end of February, shipping through this channel has ceased.
Although some shipments have been successfully rerouted, experts estimate that the conflict has removed about 10% of the world's oil supply from the market.
Concerns have intensified due to damaging reciprocal attacks on a key gas field operated by Iran and Qatar, raising the risk that fossil fuel production capacity could be constrained for years, even if the conflict is resolved swiftly.
