Scott Bessent, the United States Treasury Secretary, set off a wave of debate in energy and policy circles Thursday by announcing that Washington may lift sanctions on Iranian oil stranded on ships at sea. The administration’s stated goal is to boost global oil supply rapidly and bring prices down from the elevated levels caused by Iran’s deliberate closure of the Strait of Hormuz.
The Strait of Hormuz closure has effectively removed a massive chunk of global oil supply from the market, with estimates suggesting the shortfall runs between 10 and 14 million barrels per day. Oil prices have stayed above $100 per barrel for two consecutive weeks as a result, placing enormous pressure on oil-importing nations, airlines, shipping companies, and consumers worldwide.
Bessent said the 140 million barrels of Iranian oil currently aboard tankers — oil that would otherwise have been sold to China — could be redirected to global markets if sanctions are lifted temporarily. He characterized the plan as strategically turning Iran’s own oil exports into a weapon against the economic pressure that Iran hopes to generate through the strait closure.
The Treasury has previously demonstrated willingness to use this playbook, having issued a similar waiver for sanctioned Russian oil stranded at sea, which added approximately 130 million barrels to world supplies. Alongside the Iranian waiver, additional draws from the US Strategic Petroleum Reserve are also planned beyond the coordinated G7 commitment of 400 million barrels made the previous week.
Yet experts cautioned that the plan carries serious unintended consequences. Allowing Iran to sell its oil, even oil that was already en route to buyers, would generate revenue that could be funneled toward the Iranian government’s military budget, its regional allies, and its proxy forces. Analysts from compliance and policy firms described the plan as counterproductive to the US’s broader geopolitical objectives in the region.