EPA
The US has lifted sanctions on some Iranian oil, as it scrambles to contain the impact of its war in Iran on energy markets.
Treasury Secretary Scott Bessent announced the issuing of a narrowly tailored, short-term authorisation permitting the sale of Iranian oil currently stranded at sea.
The move marks a stunning reversal of longstanding American policy – and one with highly uncertain pay-off.
Experts said it was likely to have a limited effect on prices, and could boost funds going to the Iranian regime that the US is attacking.
On Friday Bessent said the permit was applicable to the sale of crude oil and petroleum products of Iranian origin currently loaded on vessels.
The authorisation will last until 19 April, the treasury department added.
The treasury secretary said the move would quickly bring about 140m barrels of oil to global markets.
Before the war, China was the primary buyer of the oil coming out of Iran, scooping up the barrels at a steep discount due to sanctions imposed by the US and other countries.
In an interview with Fox Business on Thursday, Bessent said a waiver on sales restrictions could help divert more of those supplies to other countries in need of oil, such as India, Japan and Malaysia, while forcing China to pay “market price”.
Writing on X, Bessent said Iran would have difficulty accessing any revenue generated from the purchase of Iranian oil and that the US would “continue to maintain maximum pressure on Iran”.
However, David Tannenbaum, director of Blackstone Compliance Services, a consultancy specialising in maritime sanctions, told the BBC on Thursday that the idea was “bananas”.
“Essentially we’re allowing Iran to sell oil, which could then be used to fund the war effort,” he said.
The waiver would not have much impact on prices, experts warned.
“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 said she did not think the US would want money from oil sales to go to Iran’s government – but it could be hard to prevent in practice.
“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.”
There has also been some positive reaction from financial experts to the Trump administration’s temporary reversal of sanctions on Iranian oil.
David Malpass, the former president of the World Bank, said the move was a “narrow action that should cause downward pressure on oil prices outside China” and “should also reduce Iran’s oil revenue and undercut its military”.
Writing on X, he added: “This is one in a number of steps last week (including the Jones Act waivers, opening pipelines and building refineries) that will benefit the U.S. and add to long-term energy supplies.”
The US has already undertaken other efforts to boost supply, including the release of millions of barrels of oil reserves and the suspension of some sanctions on Russian oil last week.
That second decision sparked significant blowback from leaders in Europe, who said it would strengthen President Vladimir Putin’s regime and prolong the war in Ukraine.
About a fifth of the 100m barrels of oil that the world consumes every day usually travels via the Strait of Hormuz, which runs along part of Iran’s coast. But since the war began at the end of February, shipping in the channel has come to a halt.
While some of the barrels being transported through the strait have been successfully re-routed, experts still estimate that the war has knocked about a tenth of the world’s supply out of the market.
Concerns about the situation have increased, as damaging tit-for-tat attacks on a key gas field operated by Iran and Qatar raise the risk that capacity for providing fossil fuels could be constrained for years, even if the conflict is resolved relatively quickly.
Additional reporting by Natalie Sherman, BBC business reporter
