Trump officials may free stranded Iranian oil to calm soaring prices, but one detail has experts horrified

As reported by The Guardian, the United States may soon lift sanctions on Iranian oil currently stuck in tankers at sea, according to Treasury Secretary Scott Bessent. The move is aimed at bringing down soaring oil prices after Iran’s closure of the Strait of Hormuz sent costs sharply higher.

Bessent said on Thursday that, “In the coming days, we may un-sanction the Iranian oil that’s on the water.” He estimated that the supply amounts to roughly 140 million barrels, or about 10 to 14 days of oil, and said the oil was initially destined for China but would be redirected. Bessent added that the administration would be “using the Iranian barrels against the Iranians to keep the price down for the next 10 to 14 days” as the campaign against Iran continues.

Oil prices have remained above $100 per barrel for much of the past two weeks. The spike follows Iran’s decision to close the Strait of Hormuz to shipping and its subsequent attacks on tankers in the region.

Critics say the short-term fix could backfire

This would not be the first time the Treasury has taken such a step. Bessent said officials recently used a similar temporary measure for sanctioned Russian oil stranded on tankers, adding around 130 million barrels to global supplies. A source familiar with the Treasury’s plans said any easing of sanctions on Iranian oil would likely come through a waiver similar to the one used for Russian crude, allowing the sale of oil already at sea within a narrowly defined timeframe.

The idea behind that waiver is to divert oil that was already headed for China into broader global markets, amid Saudi warnings to Iran. Officials believe that could help maintain supply and reduce Iran’s leverage over the Strait of Hormuz.

Bessent also said the US plans to take additional steps to increase supply. Those include a unilateral release from the Strategic Petroleum Reserve on top of the G7’s coordinated release of 400 million barrels last week. He said the Treasury would “absolutely not” intervene in oil futures markets and instead would focus on boosting physical supplies to offset the 10 million to 14 million barrel-per-day deficit caused by the Strait of Hormuz closure.

Some experts, however, say the proposal is unlikely to have a meaningful long-term effect on prices and could end up benefiting Iran. David Tannenbaum of Blackstone Compliance Services said, “To put it mildly, this is bananas,” adding, “Essentially, we’re allowing Iran to sell oil, which could then be used to fund the war effort.”

Alex Zerden, founder of Capitol Peak Strategies, raised similar concerns, with higher gas prices nationwide already adding pressure. He also said Iran would likely profit from the sales and gain more money to fund its regime, the war, and its proxies.