US Eases Sanctions on Iranian Oil Amid War, Aims to Stabilise Global Energy Markets
The United States has taken a surprising step by easing sanctions on some Iranian oil, as it tries to limit the impact of its ongoing war in Iran on global energy markets.
This move comes at a time when energy prices are rising sharply worldwide due to disruptions in shipping and production caused by the conflict.
According to the US Treasury Department, the permit applies to crude oil and petroleum products of Iranian origin that are already loaded on vessels. The authorisation will remain in effect until April 19.
Bessent said the move could quickly bring about 140 million barrels of oil into global markets.
Experts believe the move may have only a limited impact on global oil prices. At the same time, there are concerns that it could increase funds flowing to the Iranian regime, even as the US continues its military actions.
In an interview with Fox Business, Bessent said easing restrictions could redirect some of these supplies to other countries such as India, Japan, and Malaysia, while pushing China to pay "market price".
However, he did not explain how the waiver would work in detail or whether safeguards would be in place to prevent revenue from reaching the Iranian government.
"To put it mildly, this is bananas," said David Tannenbaum, director of Blackstone Compliance Services, a consultancy specialising in maritime sanctions.
"Essentially we're allowing Iran to sell oil, which could then be used to fund the war effort."
Similarly, Rachel Ziemba expressed doubts about the effectiveness of the move.
"I don't think it's a game changer and it raises a whole lot of questions," she said.
Ziemba added that preventing oil revenue from reaching the Iranian government would be difficult 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."
The US has already taken other steps to boost oil supply, including releasing millions of barrels from reserves and easing some sanctions on Russian oil.
That earlier move faced strong criticism from European leaders, who warned it could strengthen Vladimir Putin and prolong the war in Ukraine.
Since the war began in late February, shipping through the strait has largely stopped. Although some shipments have been rerouted, experts estimate that around a tenth of global oil supply has been disrupted.
Even if the conflict ends soon, the damage to infrastructure could limit fossil fuel supply for years.
This move comes at a time when energy prices are rising sharply worldwide due to disruptions in shipping and production caused by the conflict.
Temporary Approval for Iranian Oil Sales
Scott Bessent announced a narrowly tailored and short-term authorisation that allows the sale of Iranian oil currently stranded at sea.According to the US Treasury Department, the permit applies to crude oil and petroleum products of Iranian origin that are already loaded on vessels. The authorisation will remain in effect until April 19.
Bessent said the move could quickly bring about 140 million barrels of oil into global markets.
Major Shift in US Policy
This decision marks a dramatic shift in longstanding US policy towards Iran. While it aims to stabilise energy markets, the outcome remains uncertain.Experts believe the move may have only a limited impact on global oil prices. At the same time, there are concerns that it could increase funds flowing to the Iranian regime, even as the US continues its military actions.
China, India and Other Buyers in Focus
Before the war, China was the main buyer of Iranian oil, purchasing it at discounted rates due to sanctions imposed by the US and other countries.In an interview with Fox Business, Bessent said easing restrictions could redirect some of these supplies to other countries such as India, Japan, and Malaysia, while pushing China to pay "market price".
However, he did not explain how the waiver would work in detail or whether safeguards would be in place to prevent revenue from reaching the Iranian government.
Experts Raise Concerns Over Policy Impact
The decision has drawn sharp reactions from experts in the field."To put it mildly, this is bananas," said David Tannenbaum, director of Blackstone Compliance Services, a consultancy specialising in maritime sanctions.
"Essentially we're allowing Iran to sell oil, which could then be used to fund the war effort."
Similarly, Rachel Ziemba expressed doubts about the effectiveness of the move.
"I don't think it's a game changer and it raises a whole lot of questions," she said.
Ziemba added that preventing oil revenue from reaching the Iranian government would be difficult 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."
Trump’s Response and Broader Strategy
Donald Trump did not give a clear answer when asked about the policy, stating, "we will do whatever is necessary to keep the price".The US has already taken other steps to boost oil supply, including releasing millions of barrels from reserves and easing some sanctions on Russian oil.
That earlier move faced strong criticism from European leaders, who warned it could strengthen Vladimir Putin and prolong the war in Ukraine.
Strait of Hormuz Disruption Hits Global Supply
The conflict has also severely impacted oil transportation through the Strait of Hormuz, a critical route through which about one fifth of the world’s daily oil supply passes.Since the war began in late February, shipping through the strait has largely stopped. Although some shipments have been rerouted, experts estimate that around a tenth of global oil supply has been disrupted.
Rising Risks for Global Energy Markets
Concerns continue to grow as repeated attacks on a major gas field operated by Iran and Qatar threaten long-term energy production capacity.Even if the conflict ends soon, the damage to infrastructure could limit fossil fuel supply for years.
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