The US has allowed the sale of Iranian oil and petrochemical products that have been loaded onto tankers, its latest effort to counter rising oil prices due to the Middle East war.
The Department of Treasury issued a general license for energy thatâs already on vessels as of Friday, with such purchases authorized through April 19. The measure follows similar moves for Russian oil on the water in a bid to ease an unprecedented fuel supply crunch caused by the war.
For now, the vast majority of Iranâs oil is bought by Chinese customers â mainly independent refiners known as teapots. While the US waiver would widen the pool of potential buyers, any new customers would still face the challenge of structuring deals while other restrictions on Iran, including its access to international financial markets, remain in place.
The US and Israeli war on Iran has led to a virtual halt in shipments through the Strait of Hormuz, where 20% of global oil typically transits, with only a trickle of Iranian and Chinese tankers getting through. Brent crude prices have surged more than 50% this month, while Middle Eastern oil like Abu Dhabiâs flagship Murban grade has doubled in value.
The resulting spike in fuel prices for American consumers is heaping immense pressure on the US president and the Republican Party leading up to the November midterm elections. Prolonged inflationary pressures would undercut the GOPâs ability to retain control of the Senate and the House, and the loss of either chamber threatens to derail Trumpâs ability to carry out his agenda.
Read More:Â US Treasury Allows More Russian Oil Sales to Help Tame Prices
US Treasury Secretary Scott Bessent called the Iranian oil waiver a ânarrowly tailored, short-term authorization permitting the sale of Iranian oil currently stranded at sea,â in a post on X, adding that the measure will release about 140 million barrels. He also said that Iran âwill have difficulty accessing any revenue generated.â
That 140-million-barrel number likely refers to oil on water. That figure probably includes cargoes in transit which may already be booked, and may not reflect actual availability. Goldman Sachs Group Inc. estimates there are 105 million barrels of Iranian oil on water.
Iran disputed the figure, with oil ministry spokesman Saman Ghodousi saying on X that the nation has no floating crude, nor a surplus thatâs available for international markets. Ghodousi said the US was simply trying to provide psychological support to the oil market.
In the US, Congressional Democrats slammed the measure, arguing Trumpâs move is an economic gift to Iran in the middle of a war that the president started.
âClown show doesnât begin to describe it,â Virginia Democrat Don Beyer said in a post on X.
In addition to sanctions waivers, the Trump administration released more than 45 million barrels of oil from its strategic reserves and temporarily waived a century-old shipping mandate in order to lower transport costs.
The global oil benchmark settled Friday above $112 a barrel â the highest level since mid-2022 â before easing in post-settlement trading after Trump said he was considering âwinding downâ US military efforts against Iran.
This story was originally featured on Fortune.com