U.S. issues sweeping Iran oil sanctions waivers, unlocking billions in revenue for Tehran

The United States has broadly rolled back sanctions on Iranian oil, allowing dollar-denominated trade for the first time in more than four decades as Washington and Tehran continue fragile negotiations for a permanent peace deal.

US Treasury on Monday Issued a blanket 60-day exemption Iran will be allowed to produce and sell crude oil, petrochemicals and petroleum products in US dollars until August 21.

Within the scope of the license called General License The exemption also theoretically reopens the door to U.S. imports of Iranian crude; this trade has virtually collapsed under the weight of heavy sanctions since the 1990s. According to the US Energy Information Administration.

Monday’s move marks the most comprehensive rollback of America’s oil sanctions on Iran Since the Islamic Revolution of 1979It would reverse years of oppression designed to cripple Iran’s economy and is expected to provide the Iranian regime with billions of dollars in oil revenues.

The license could unlock the floating inventory of about 67 million barrels of Iranian crude stranded in the Gulf, giving Iran a potential financial gain of $8 billion to $9 billion, according to Miad Maleki, a former Treasury sanctions official and now senior fellow at the Foundation for Defense of Democracies, a Washington-based think tank.

“Manufacturing, sales, dollar payments, petrochemicals and protected transportation—all came into play at the same time,” he said. “Together, they mean a sustainable reopening of Iran’s most important revenue stream.”

US President Donald Trump defended the lifting of sanctions in a statement on Monday, saying that the profits from oil would go towards Iran buying American agricultural products instead of rebuilding its military.

The latest easing of sanctions follows the signing of a memorandum of understanding between the United States and Iran last week. Positive progress was made towards a final agreement during the talks that ended on Monday in Switzerland.

Iran’s crude exports have increased in recent weeks as U.S.-Iran negotiations progress. 6.79 million barrels It was shipped last week – the highest in two months – according to maritime intelligence firm Windward.

Brett Erickson, managing director at Obsidian Risk Advisors, said Iranian crude oil, which is generally trading at a discount to global benchmarks, could shift to a premium over Brent given demand pressure, which could further compound Tehran’s unexpected revenue decline.

The latest exemption allows Iran to send oil revenues directly to the central bank, reducing transaction costs previously incurred by Iran. routing of payments through shadow banking intermediaries.

“We expect China to aggressively step up purchases now that dollar swaps are allowed,” Maleki said. In the past, Chinese buyers carried out their transactions through opaque channels to avoid exposure to secondary US sanctions.

Maleki said the license gives both state refiners and independent refiners or kettles access to intermediary banking networks they had previously had to bypass, eliminating underlying banking frictions that restrict volume. He expects a rapid storage “fill cycle” in which Chinese buyers can rush to replenish their stocks before the exemption expires in August.

China currently buys about 90% of Iran’s oil exports, and teapots make up the bulk of China’s imports. According to JPMorgan, the country’s crude imports fell by an unprecedented 4.8 million barrels per day between February and May; This is a steeper decline than the 4 million barrel drop seen at the height of the epidemic in the second half of 2020.

Muyu Xu, senior oil analyst at Kpler, said signs of the uptrend have not materialized yet. Buyers are scrambling to evaluate the new mandate and complete internal compliance reviews, especially those that were not previously active in Iranian crude, Xu said.

However, interest from Chinese buyers will ultimately increase, but actual supply will depend on pricing and cargo availability, Xu added.

Iran will likely use that 60-day window to repair war-damaged oil facilities and sign long-term contracts with Chinese buyers, said Michael Feller, chief strategist at Geopolitical Strategy. “This will be a huge boost to Iran, both in terms of its economy and its sense of victory.”