Treasury Secretary Scott Bessent’s proposal to temporarily lift sanctions on Iranian crude oil stranded on tankers has put the entire US sanctions arsenal under intense scrutiny, raising questions about when and how the country’s most powerful economic tools can be selectively suspended. Bessent revealed Thursday the administration is considering the measure to address oil prices above $100 per barrel caused by Iran’s Hormuz blockade.
The Hormuz blockade has created a daily supply deficit of between 10 and 14 million barrels for close to two weeks, generating a price shock that has forced the administration into consideration of measures that push the boundaries of established sanctions policy. The scrutiny of the sanctions arsenal reflects broader concerns about whether economic pressure tools maintain their deterrent value when they are visibly suspended under market pressure.
Bessent confirmed approximately 140 million barrels of Iranian crude are stranded on tankers in international waters, oil originally destined for Chinese buyers. A targeted temporary waiver could redirect this supply to global markets, providing roughly two weeks of price relief during the US campaign to resolve the Hormuz crisis.
The Treasury’s sanctions arsenal has previously accommodated comparable suspensions, including a waiver for Russian oil that added approximately 130 million barrels to world supply. An additional unilateral US Strategic Petroleum Reserve release beyond the G7’s 400 million barrel coordinated commitment is also being planned, alongside the administration’s firm stance against financial market intervention.
Sanctions experts were most vocal in their scrutiny. They argued that each time the US suspends oil sanctions under market pressure — whether for Russia or Iran — it signals to other sanctions targets that generating sufficient market pressure may be an effective strategy for obtaining sanctions relief. Critics warned that the long-term erosion of the sanctions arsenal’s credibility and deterrent value could prove far more costly than the immediate price relief achieved.