Treasury Secretary Scott Bessent generated significant controversy Thursday by revealing that the US government may soon lift sanctions on Iranian crude oil stranded in tankers on the open sea. He presented the measure as a targeted supply intervention designed to reduce oil prices that have soared above $100 per barrel since Iran’s closure of the Strait of Hormuz.
The Strait of Hormuz blockade has cut off one of the world’s most critical oil shipping routes, creating a daily shortfall of 10 to 14 million barrels. The resulting price surge has persisted for nearly two weeks, putting pressure on governments and consumers who depend on affordable oil for transportation, manufacturing, and heating.
Approximately 140 million barrels of Iranian oil are currently aboard tankers at sea, oil that had been heading toward China before the crisis developed. Bessent said the administration is considering allowing this oil to be sold on global markets, describing it as a way to use Iran’s own resources to neutralize the economic damage caused by the Hormuz closure.
The Treasury has applied a similar approach with Russian oil, issuing a narrow waiver that allowed stranded Russian crude to enter global markets and contributed approximately 130 million barrels to world supply. Additional supply measures, including a unilateral US draw from the Strategic Petroleum Reserve beyond the G7’s coordinated 400 million barrel release, are also planned.
Sanctions policy specialists were alarmed by the proposal. Experts argued that sales revenue from Iranian oil would ultimately benefit the Tehran government, providing funds that could sustain military activities and regional proxy operations. Several analysts characterized the proposal as strategically incoherent, offering brief price relief at the cost of empowering an adversary’s war effort.