WASHINGTON – Treasury Secretary Scott Bessent announced Friday that the United States will not extend waivers permitting the purchase of Russian oil and petroleum products currently at sea, nor will it renew a one-time waiver for Iranian oil. This definitive stance comes as global energy markets grapple with the U.S.-Israeli war in Iran and the closure of the Strait of Hormuz.
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Waivers Terminated for Russian and Iranian Oil
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Secretary Bessent explicitly stated the U.S. does not plan a third renewal for the waiver concerning Russian oil. Regarding Iranian oil, his position was even more emphatic. “Not the Iranians,” Bessent told The Associated Press. “We have the blockade, and there’s no oil coming out.” This decision signals a hardening of U.S. sanctions policy against both nations, particularly Iran, where Bessent anticipates immediate production impacts.
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Bessent further predicted severe consequences for Iran’s energy sector. “And we think in the next two, three days, they’re going to have to start shuttering production, which will be very bad for their wells,” he added, indicating a swift and detrimental effect on the country’s oil infrastructure.
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Geopolitical Backdrop and Market Stability
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The decision unfolds against a backdrop of heightened geopolitical instability, with the world on edge due to the U.S.-Israeli war in Iran. This conflict has significantly impacted global energy markets, which have been “ensnarled by the closure of the Strait of Hormuz,” a critical chokepoint for oil shipments.
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The initial waiver for Russian oil sales and petroleum products was issued in March with the explicit goal of stabilizing global energy markets. This measure was taken after crude oil prices had surged above $100 per barrel, demonstrating the U.S. Treasury’s previous efforts to mitigate price volatility.
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Bessent’s Evolving Rationale
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Secretary Bessent’s latest announcement marks a firm reversal from a previous, temporary change of heart regarding the Russian oil waiver. The Treasury Department had renewed the waiver once before, despite Bessent initially stating he had no plans to extend the sanctions relief. He clarified this shift during an AP interview, explaining that the initial renewal was a humanitarian response.
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“More than 10 of the most vulnerable and poorest countries came to me and said, ‘Can you help?’” Bessent recounted from the World Bank and International Monetary Fund meetings. “It was for those vulnerable and poor countries.” However, he now sees no further need for such an extension for Russian oil. “But I wouldn’t imagine that we’d have another extension. I think the Russian oil on the water has been largely sucked up,” Bessent concluded, suggesting the market has absorbed the previously exempted shipments.
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The U.S. Treasury’s decision to cease these oil waivers underscores a strategic pivot, prioritizing sanctions enforcement over short-term market stabilization efforts for these specific flows. This move is expected to intensify pressure on both Russia and Iran, with potential ripple effects across an already volatile global energy landscape.
