Iranian Oil Sanctions: US may unsanction 140 million barrels of Iranian oil to cool prices as Gulf war shakes energy markets

File photo: US treasury secretary Scott Bessent (Picture credit: AP)

The Trump administration is considering lifting sanctions on around 140 million barrels of Iranian oil currently stranded on tankers in a bid to boost global supply and cool surging crude prices, as the war in the Gulf continues to hammer energy infrastructure and disrupt shipping through the Strait of Hormuz.US treasury secretary Scott Bessent said on Thursday that Washington could move within days to allow the oil to enter the market.“In the coming days, we may unsanction the Iranian oil that’s on the water. It’s about 140 million barrels,” Bessent told Fox Business Network’s Mornings with Maria programme.

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Emergency energy move as oil stays above $100

As per Reuters, the US administration believes releasing the stranded Iranian barrels could help keep oil prices lower over the next 10 to 14 days, at a time when crude has remained above $100 per barrel for much of the past two weeks.Bessent said the move is part of a broader effort to deal with the supply shock caused by the closure of the Strait of Hormuz, which he described as creating a deficit of roughly 10 million to 14 million barrels per day in the physical market, according to Reuters.“So, to be clear, we’re not intervening in the financial markets. We are supplying the physical markets,” he said, as quoted by Reuters.He also stressed that the Treasury would “absolutely not” intervene in oil futures markets, instead focusing only on steps that increase actual supply.

White House signals ‘break the glass’ response

Bessent described the administration’s energy response as a “break the glass plan” being executed across the Treasury and the broader executive branch to manage immediate energy security risks.He said the stranded Iranian crude represents roughly 10 days to two weeks of supply that Iran had been shipping, much of which would otherwise have gone to China.“In essence, we will be using the Iranian barrels against the Iranians to keep the price down for the next 10 or 14 days as we continue this campaign,” Bessent said.Bessent signalled the administration still has “lots of levers” and “plenty more that we can do” to influence global energy pricing if the crisis deepens.

More SPR releases also on the table

Alongside the possible easing of sanctions on Iranian oil, the administration is also weighing another release from the US Strategic Petroleum Reserve (SPR).Bessent said the US could undertake a unilateral SPR release in addition to last week’s coordinated G7 release of 400 million barrels.Bessent called last week’s move the “largest coordinated SPR release in history” and said Washington could still do more on its own if needed.He also drew a comparison with a recent US decision to allow the sale of sanctioned Russian oil stranded on tankers, which added around 130 million barrels to global supplies.“We un-sanctioned Russian oil. We knew that there were about 130 million barrels on the water and we created supply that is beyond the Strait of Hormuz,” Bessent said.

Gulf energy attacks intensify global price shock

The discussion over emergency supply measures comes as the Gulf war continues to hit critical energy assets and send oil and gas prices sharply higher.Brent crude jumped nearly 10 per cent to $118 a barrel on Thursday morning, while European natural gas prices surged as much as 30 per cent, after tit-for-tat attacks across the Persian Gulf.Qatar said Iranian attacks damaged gas sites, including the Ras Laffan terminal, the world’s largest liquefied natural gas facility.Drone attacks caused fires at two state-owned refineries in Kuwait, a drone fell at a major Saudi export terminal, and the UAE said it had responded to incidents at gas facilities and an oil field caused by debris from missile interceptions.Oil prices have stayed elevated because Iran has closed the Strait of Hormuz to shipping and attacked tankers, compounding fears of a sustained supply crunch.

Allies being pressed to protect Hormuz

Bessent also used Thursday’s remarks to press US allies to take a bigger role in securing shipping lanes through the Strait of Hormuz.US President Trump was due to meet Japanese Prime Minister Sanae Takaichi at the White House later in the day to discuss Japan’s possible naval role in ensuring safe passage for vessels, given Japan’s heavy dependence on Gulf oil.“She’s very pro-US I think we’re going to have a very good discussion today,” Bessent said of Takaichi.Bessent further said, “When President Trump says our allies should join us in a coalition along the straits of Hormuz, they’re the ones who need this oil,” while noting that the US is now an oil exporter.He added it would be “very disappointing for those who benefit the most not to do something” to help escort ships through the strait.

Wider war context deepens market anxiety

The energy emergency is unfolding alongside a widening military campaign.US defence secretary Pete Hegseth said on Thursday that the US military had struck more than 7,000 targets in Iran since the war began nearly three weeks ago, damaging or sinking more than 120 Iranian navy ships and leaving its military ports “crippled.”“We’re winning decisively and on our terms,” Hegseth said, though he declined to say when the conflict might end.European leaders have grown increasingly alarmed by the strikes on energy infrastructure, with French President Emmanuel Macron warning in Brussels that the escalation was “reckless” and that destruction of production facilities could prolong the war’s economic fallout.