Treasury Secretary Scott Bessent’s Thursday announcement that the US may temporarily lift sanctions on Iranian crude oil stranded on tankers has highlighted the limits of oil sanctions as a crisis management tool, analysts said. Bessent said the potential release of approximately 140 million barrels of Iranian crude is part of the emergency supply response to oil prices above $100 per barrel caused by Iran’s Hormuz blockade.
The limits of sanctions as a crisis tool have been exposed by the Hormuz blockade in a specific and revealing way: the sanctions designed to deny Iran oil revenues are being considered for suspension precisely because the oil supply Iran is withholding is creating economic pain severe enough to motivate that suspension. Iran’s closure has removed between 10 and 14 million barrels of daily supply from global markets for close to two weeks, demonstrating the coercive power of oil supply control over sanctions regimes.
Bessent confirmed the approximately 140 million barrels of Iranian crude on tankers, originally heading toward Chinese ports, as the oil under consideration. A targeted temporary waiver could redirect this supply to global buyers, providing roughly two weeks of price relief during the US campaign to resolve the Hormuz crisis.
The Treasury has previously encountered the limits of sanctions as crisis tools, having issued 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 commitment is also being prepared, while the administration has ruled out financial market intervention.
Sanctions theorists and policy analysts used the Iranian crude proposal to advance a broader argument about the design of oil sanctions regimes. They suggested that sanctions that can be suspended under market pressure from the sanctions target have an inherent structural weakness: the target can generate the very pressure that motivates suspension. Critics argued that the Hormuz crisis has exposed this weakness clearly and that the administration should consider fundamental reforms to sanctions design after the crisis to prevent future targets from exploiting the same vulnerability.