US temporarily lifted sanctions on Iranian oil

Tankers in the Strait of Hormuz. Photo: AP / Altaf Qadri

The US Treasury Department temporarily, for one month, allowed the purchase and sale of Iranian oil to reduce energy prices, which have risen as a result of Tehran's blockade of shipping in the Strait of Hormuz due to the war the US and Israel are waging with Iran. In fact, Washington will allow Tehran to profit during the war with the US, experts warned, writes the BBC.

On Friday evening, the US Treasury Department published a license that, for 30 days, lifts the ban on the purchase and sale of oil and petroleum products from Iran, provided that they were already shipped and in transit as of that day. The license does not permit new transactions.

US Treasury Secretary Scott Bessent described the decision as "highly specialized" and "short-term." According to his assessment, this will quickly bring about 140 million barrels of oil to world markets, which should partially curb the deficit and contribute to lower prices, which have significantly increased due to Tehran's blocking of commercial shipping in the Strait of Hormuz amid the US-Israel war against Iran, now in its fourth week.

Currently, the main recipient of Iranian oil is China, which buys it at a discount, Bessent wrote.

"By temporarily opening access to these reserves for the whole world, the United States will quickly bring about 140 million barrels of oil to global markets, expanding the volume of world energy resources and helping to reduce the temporary pressure on supplies created by Iran.

"In essence, we will use Iranian oil against Tehran to curb prices, while continuing the operation [against Iran] "Epic Fury,"" Bessent explained the logic of the decision.

In his opinion, "Iran will find it difficult to access any proceeds received," as "the US will continue to exert maximum pressure on Iran and its ability to access the international financial system."

A week ago, a similar temporary easing of American sanctions was introduced concerning Russian oil.

Bessent revealed in an interview with Fox News on Thursday that the US was considering the possibility of temporarily lifting sanctions on Iranian oil.

Bessent then stated that lifting restrictions on the sale of Iranian oil could help redirect it from China, which currently buys it at a discount, to other countries such as India, Japan, and Malaysia, forcing China to pay "market price." According to his assessment, the entry of Iranian oil into the market would lower global prices for 10-14 days.

Even at this stage, this idea, which contradicts US sanctions policy, drew criticism from experts who predicted that its impact on prices would likely be limited, while the sale of oil would financially support the regime in Iran, which the US is attacking.

"To put it mildly, this [lifting sanctions on Iranian oil] is complete nonsense," David Tanenbaum, director of Blackstone Compliance Services, a consulting firm specializing in maritime sanctions, told the BBC on Thursday. "Essentially, we are allowing Iran to sell oil that can then be used to fund military activities."

Experts also doubt that Iranian oil will radically reduce global prices, which reached $120 per barrel amid the closure of the Strait of Hormuz and contradictory statements by US President Donald Trump about the prospects of ending the war in Iran. They note that the volume of discussed Iranian oil supplies is relatively small compared to overall demand.

"This might slightly increase supply, but I don't think it will fundamentally change the situation, though it will raise a lot of questions," believes Rachel Ziemba, a senior fellow at the analytical "Center for a New American Security."

Meanwhile, Iranian authorities state that they currently have no surplus oil to offer international markets. "Currently, Iran has virtually no surplus oil left, neither on maritime vessels nor for supplies to other international markets, and the US Treasury Secretary's statement is solely aimed at instilling hope in buyers," AFP quotes Saman Ghadousi, an official representative of the Iranian Ministry of Oil.

The rise in oil prices in March was significantly affected by Iran's blockade of the Strait of Hormuz in the Persian Gulf – approximately 20% of the world's extracted oil transits through it. The Islamic Revolutionary Guard Corps promised to block oil supplies from the Persian Gulf until US and Israeli attacks cease.

The US decision to lift sanctions on Iranian oil was another attempt to increase market supply, as was the release of millions of barrels of oil from reserves and last week's suspension of sanctions on Russian oil.

The easing of sanctions against Moscow then drew sharp criticism from European leaders, who stated that it would strengthen Vladimir Putin's regime and delay the end of the war in Ukraine. Volodymyr Zelenskyy also spoke about this.

The Treasury's decision was published on Friday, and it is still unclear whether Bessent's proposal will provoke a similar reaction in the US, where the House of Representatives literally this week passed a bill aimed at strengthening sanctions against Iran's oil sector.

When Bessent first announced that the Treasury was considering lifting sanctions on Iranian oil, the BBC reached out for comments to those American politicians who supported the bill to strengthen sanctions. Mike Lawler, a Republican from New York who authored the bill, did not respond to the BBC's request, nor did Democratic Senator Jeanne Shaheen, a member of the Foreign Relations Committee.

The US Treasury announced its decision shortly after President Donald Trump gave conflicting signals regarding his plans for the war with Iran. He first told reporters that he did not want a ceasefire, but soon after wrote on social media that the US was considering winding down its military operation in Iran soon, as the US, in his opinion, was very close to achieving its goals.

He had previously said that, in his opinion, the war could last four to six weeks. The conflict is now in its fourth week.

The US President had already tried to influence oil prices by making statements about the prospects of ending the war with Iran. When Brent oil prices soared to $120 per barrel on the tenth day of the operation, he told reporters that the war with Iran was "practically over." This helped lower prices, but they then began to rise again.

On Friday, March 20, oil markets closed with gains, though remaining below $120 per barrel, AFP notes. A barrel of Brent crude rose 3.26% to $112.19. Its American counterpart, the traditionally cheaper West Texas Intermediate (WTI) crude, rose 2.27% to $98.32.

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