US Treasury Secretary Signals Potential Sanctions Relief on Iranian Oil
Treasury Secretary Scott Bessent has indicated that the United States may soon remove sanctions on approximately 140 million barrels of Iranian oil currently stranded on tankers at sea. This move, announced during an appearance on Fox Business Network's Mornings With Maria on Thursday, is part of Washington's strategy to curb soaring global oil prices exacerbated by Iran's closure of the strategic Strait of Hormuz.
Immediate Supply Boost Amid Geopolitical Tensions
"In the coming days, we may un-sanction the Iranian oil that's on the water. It's about 140 million barrels," Bessent stated. He elaborated that this volume represents roughly 10 to 14 days of supply, which Iran had been directing primarily toward China. "In essence, we will be using the Iranian barrels against the Iranians to keep the price down for the next 10 to 14 days as we continue this campaign," he added, referencing ongoing efforts to manage market disruptions.
Oil prices have remained above $100 per barrel for much of the past two weeks, driven by Iran's actions in blocking the Strait of Hormuz to shipping and launching attacks on tankers. This critical chokepoint handles about one-fifth of the world's oil shipments, making its closure a significant factor in global energy markets.
Precedent and Planning for Sanctions Waivers
The Treasury Department recently implemented a similar temporary measure for sanctioned Russian oil stranded on tankers, which Bessent noted added around 130 million barrels to global supplies. A source familiar with the Treasury's planning, who spoke on condition of anonymity, revealed that if the Trump administration proceeds with easing sanctions on Iranian oil, one option under consideration is a waiver akin to that used for Russian oil. This would permit sales of crude already at sea within a narrow timeframe.
"A potential waiver could accelerate the diversion of oil already destined for China into global markets more broadly, helping ensure adequate supply and blunting Iran's leverage over the Strait of Hormuz," the source explained.
Additional Measures to Stabilise Markets
Bessent outlined further actions the US intends to take to increase oil supply, including a unilateral release from the Strategic Petroleum Reserve that exceeds last week's coordinated G7 release of 400 million barrels. He emphasised that the Treasury would "absolutely not" intervene in oil futures markets but would focus on boosting physical supplies to address the daily deficit of 10 million to 14 million barrels caused by the strait's closure.
"So, to be clear, we're not intervening in the financial markets. We are supplying the physical markets," Bessent asserted, highlighting a distinction between market manipulation and direct supply augmentation.
Expert Skepticism and Long-Term Concerns
However, experts have expressed doubts about the long-term efficacy of Bessent's proposal, warning it could inadvertently benefit Iran. David Tannenbaum of Blackstone Compliance Services commented to the BBC, "To put it mildly, this is bananas. Essentially, we're allowing Iran to sell oil, which could then be used to fund the war effort."
Alex Zerden, founder of Capitol Peak Strategies, echoed these concerns in remarks to the New York Times, stating, "Iran will likely profit from these sales, thereby providing more money to fund its regime, the war and its proxies. I don't think this stopgap measure will provide the market with assurance."
These critiques underscore the complex geopolitical ramifications of the potential policy shift, as the US balances immediate economic pressures against broader strategic interests in the Middle East.
