On Thursday, March 19, U.S. Treasury Secretary Scott Bessent announced that the United States may soon “lift sanctions on Iranian oil exports” and possibly release oil from its strategic petroleum reserves to lower oil prices.
The “lifting of sanctions” entails allowing Iran to openly sell restricted crude oil to Europe and other regions. With many oil facilities in the Persian Gulf region damaged or production disrupted due to conflicts, this new source of oil supply could rapidly boost global oil availability.
During an interview with Fox Business Channel on Thursday, Bessent said, “In the coming days, we may lift sanctions on Iranian offshore oil. This batch of oil amounts to around 140 million barrels, which, depending on the calculation method, equates to 10 days to 2 weeks of supply.”
He added, “This oil was initially intended to be shipped by Iran to China. In actuality, we will utilize this Iranian oil to counter Iran, to push down oil prices within the next 10 to 14 days, and we will continue to advance this operation. So, we have many methods.”
Currently, Iranian oil primarily goes to China, but there are also some “shadow fleets” that transport Iranian oil to other countries to evade sanctions. Once the U.S. lifts sanctions on Iranian oil, offshore Iranian oil can be sold to any highest bidder without having to reduce prices for China.
For the past fifty years, Iranian oil has faced intermittent sanctions, with the most recent being in 2018 when President Trump implemented comprehensive sanctions. This move was closely tied to the U.S. withdrawal from the 2015 Iran nuclear agreement. According to the agreement, Iran abandoned its nuclear program in exchange for broad sanction exemptions.
The Treasury Secretary also hinted that the U.S. could temporarily stabilize oil prices by utilizing Iran’s own oil exports and may consider using Kharg Island to serve American market objectives in the future.
Kharg Island is seen as a crucial oil terminal for Iran’s economic lifeline, akin to the jugular vein of Iran’s economy. 90% of Iran’s crude oil is exported through terminals on this island, transported here via pipelines.
The U.S. has only destroyed military equipment on Kharg Island, preserving the oil infrastructure.