In a striking policy reversal, Treasury Secretary Scott Bessent announced Thursday that the United States is considering removing sanctions from Iranian oil currently floating on tankers in international waters. The announcement signals a pragmatic, if controversial, approach to bringing down oil prices that have skyrocketed since Iran closed the Strait of Hormuz.
Bessent framed the proposal as a tactical economic move, describing approximately 140 million barrels of Iranian crude — oil previously flowing toward Chinese buyers — as an available buffer supply for global markets. He estimated this volume could cover roughly 10 to two weeks of the supply shortfall created by the strait’s closure, buying time for broader diplomatic and military efforts to take effect.
This strategy mirrors a similar approach the Treasury took with Russian oil, where a limited sanctions waiver allowed stranded Russian crude to enter global markets, contributing around 130 million barrels of additional supply. A government source indicated that any Iranian waiver would similarly be time-limited and narrowly structured to prevent it from becoming a broader policy precedent.
The Treasury Secretary also pledged additional relief through unilateral releases from the US Strategic Petroleum Reserve, supplementing the 400 million barrel coordinated release already conducted through the G7. Bessent was emphatic that these were supply-side interventions, not attempts to manipulate oil futures or financial energy markets.
Critics from the sanctions and energy policy communities were vocal in their opposition. Compliance experts warned that proceeds from selling sanctioned Iranian oil could flow back to fund Iran’s military machine and regional proxy networks, effectively undermining the US campaign against Tehran. The proposal, they said, trades short-term price relief for a longer-term strengthening of an adversary.