Treasury Secretary Scott Bessent’s proposal Thursday to temporarily lift sanctions on Iranian crude oil stranded on tankers in international waters has raised important questions about the long-term credibility of US oil sanctions. Bessent said the measure is needed to address oil prices above $100 per barrel caused by Iran’s Hormuz blockade, but experts warned it could weaken the broader sanctions architecture.
Iran’s Hormuz blockade has removed between 10 and 14 million barrels of daily supply from global markets for close to two weeks. The sustained price surge has placed the administration under significant pressure to find supply solutions quickly, creating incentives to use tools — including sanctions relief — that would not normally be considered.
Bessent confirmed approximately 140 million barrels of Iranian crude are stranded on tankers in international waters, oil originally heading toward Chinese buyers. A targeted temporary waiver, he said, could redirect this oil to global markets and provide roughly two weeks of price support while the US campaign against the Hormuz blockade develops.
The Treasury’s precedent for this kind of action includes a waiver for Russian oil that contributed approximately 130 million barrels to world supply. An additional unilateral US Strategic Petroleum Reserve release beyond the G7’s 400 million barrel joint commitment is also being planned, while the administration has categorically ruled out any financial market intervention.
Sanctions credibility experts were particularly vocal in their concern. They argued that using the waiver mechanism for both Russian and Iranian oil — consecutive adversaries in successive crises — signals to sanctions targets worldwide that oil sanctions can be suspended whenever they become economically inconvenient. Critics warned that the long-term erosion of sanctions credibility could prove a far more costly consequence than the immediate price relief is worth.