The Treasury Department is considering removing sanctions on Iranian oil currently stranded on tankers at sea as part of efforts to control rising energy prices, Treasury Secretary Scott Bessent announced Thursday.
Bessent said the administration may lift sanctions on approximately 140 million barrels of Iranian crude in the coming days. He described the move as a temporary measure to address supply disruptions caused by Iran's closure of the Strait of Hormuz.
"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," Bessent said during an appearance on Fox Business Network.
The oil stranded on tankers represents roughly 10 to 14 days of supply that Iran had been directing toward China. Oil prices have exceeded $100 per barrel for much of the past two weeks following Iran's actions blocking the critical shipping route and attacking vessels.
According to a source familiar with Treasury planning, the administration could implement a waiver similar to one previously used for Russian oil. Such a waiver would allow sales of crude already at sea within a limited timeframe. The source indicated that diverting oil already intended for China into broader global markets could help address supply shortages and reduce Iran's ability to leverage the strait closure.
The Treasury is also pursuing other measures to increase oil supplies. Bessent said the department would release additional stocks from the Strategic Petroleum Reserve beyond last week's coordinated G7 release of 400 million barrels. He emphasized that while the administration would not intervene in financial futures markets, it would focus on increasing physical supplies to compensate for the 10 to 14 million barrel-per-day deficit caused by the strait's closure.
However, experts have questioned whether this approach serves American interests. David Tannenbaum from Blackstone Compliance Services told the BBC that allowing Iran to sell oil could inadvertently strengthen the regime's financial position.
"Essentially, we're allowing Iran to sell oil, which could then be used to fund the war effort," Tannenbaum said.
Alex Zerden, founder of Capitol Peak Strategies, expressed similar concerns to the New York Times, arguing that Iran would likely profit from the sales.
"Iran will likely profit from these sales, thereby providing more money to fund its regime, the war and its proxies," Zerden said, adding that he doubted the measure would provide meaningful market reassurance.
Bessent's proposal represents a short-term approach to address immediate energy market disruptions, though analysts question its long-term effectiveness and potential unintended consequences.