Amid the worst oil supply shock in years, Treasury Secretary Scott Bessent disclosed Thursday that the US is contemplating an emergency measure: lifting sanctions on Iranian oil currently sitting aboard tankers in international waters. Bessent said the move would help address a severe market shortfall caused by Iran’s closure of the Strait of Hormuz.
The closure of the Strait of Hormuz has erased an estimated 10 to 14 million barrels per day from global oil supply, sending prices soaring above $100 per barrel. The disruption, now entering its third week, is causing widespread economic stress in oil-importing countries and raising fears of prolonged inflation.
Bessent identified approximately 140 million barrels of Iranian crude aboard tankers as a viable emergency supply. These barrels, which were originally heading to China, could be redirected to global markets through a targeted sanctions waiver, the Treasury Secretary explained, potentially providing about two weeks of supply buffer.
Precedent for this approach was set earlier in the crisis when the Treasury issued a waiver for sanctioned Russian crude, adding around 130 million barrels to global markets. The US is also preparing a unilateral release from its Strategic Petroleum Reserve on top of the G7’s coordinated 400 million barrel commitment, while explicitly ruling out any market manipulation through financial instruments.
National security and sanctions experts voiced deep concern. They argued that allowing Iranian oil to be sold would generate proceeds for the Iranian government that could fund ongoing military activities and regional proxy conflicts. Multiple analysts called the plan self-contradictory, warning it would simultaneously work against and for Iranian interests depending on the timeframe considered.