US Considers Lifting Sanctions on Iranian Oil Amid Global Energy Crunch

The US is considering lifting sanctions on some Iranian oil to ease global energy supply shortages caused by the war in Iran. Treasury Secretary Scott Bessent suggested that waiving restrictions on roughly 140 million barrels already at sea could temporarily lower prices, though experts warn the impact would be limited and could indirectly fund Iran. The move reflects US concern over energy disruptions, including halted shipments through the Strait of Hormuz and regional attacks affecting oil and gas production.

The United States is reportedly weighing a potential lifting of sanctions on certain Iranian oil shipments as it seeks to address the growing impact of the ongoing war in Iran on global energy markets. Treasury Secretary Scott Bessent discussed the proposal during an interview with Fox Business, suggesting that allowing some Iranian oil to reach international buyers could help stabilize energy prices that have surged sharply amid disruptions to shipping and production in the region. The plan, if implemented, would represent a dramatic reversal of longstanding US policy toward Iran and carries significant uncertainties regarding its effectiveness and potential consequences.
Currently, much of Iran’s oil has been purchased by China at discounted prices due to existing US and international sanctions. Bessent indicated that the waiver under consideration could focus on approximately 140 million barrels of Iranian oil that are already at sea, potentially diverting these supplies to other countries such as India, Japan, and Malaysia, while requiring China to pay market prices. He estimated that such a move could temporarily push down global oil prices for a period of 10 to 14 days. However, Bessent did not provide details on mechanisms to ensure that revenues from these sales would not flow back to the Iranian government, and the Treasury Department declined to offer further clarification.
Experts have cautioned that the actual effect on global prices would likely be limited. Much of the oil in question is already reaching international markets, and the total supply under discussion represents only a small fraction of global daily consumption. Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, noted that while the waiver could increase availability slightly, it would not be a “game changer” and raises numerous practical and political questions. David Tannenbaum, director of Blackstone Compliance Services, described the proposal as “bananas,” pointing out the risk that Iran could use funds from oil sales to support ongoing military activities.
The proposal comes amid broader efforts by the United States to address supply disruptions in the global energy market, including the release of millions of barrels from strategic reserves and the recent partial suspension of sanctions on Russian oil. The latter decision provoked criticism from European leaders, who argued that it would strengthen Russia’s position and prolong the conflict in Ukraine. Analysts suggest that a similar backlash could occur domestically or internationally in response to the Iranian oil waiver, particularly given that the US House of Representatives recently passed a bill aimed at strengthening sanctions on Iran’s oil sector. Reactions from key lawmakers, including Senator Jeanne Shaheen and Representative Mike Lawler, remain unclear, as both have not publicly commented on the proposal.
The consideration of a potential waiver underscores the administration’s concern over the current energy supply shock, which has been exacerbated by the war. According to experts, roughly one-fifth of the world’s daily oil supply, about 100 million barrels, usually transits the Strait of Hormuz, a key shipping route along Iran’s coast. Since the outbreak of the conflict at the end of February, shipping through the strait has largely halted, forcing some supplies to be rerouted while causing an estimated reduction of about 10 percent of the world’s daily oil output. Additional complications, including attacks on a gas field operated by Iran and Qatar, have heightened fears that disruptions could persist for years, even if the conflict is resolved quickly.
In summary, while the potential lifting of sanctions on Iranian oil could provide a short-term increase in supply, its overall impact on global prices is expected to be limited. At the same time, the move carries risks of indirectly funding the Iranian government and could provoke political criticism both domestically and internationally. The proposal highlights the difficult balance the United States faces between mitigating the energy crisis and maintaining its foreign policy objectives, especially in a context of heightened geopolitical tension and disrupted global oil supply chains.