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

The U.S. has issued a sweeping rollback of sanctions on Iranian oil, allowing dollar-denominated trade for the first time in more than four decades, as Washington and Tehran press on with fragile talks toward a permanent peace deal.

The U.S. Treasury on Monday issued a wide-ranging 60-day exemption allowing Iran to produce and sell crude oil, petrochemical and petroleum products in U.S. dollars through Aug. 21.

Under the so-called General License X, vessels and entities previously subject to U.S. sanctions are also cleared for transactions. The waiver also theoretically reopens the door to U.S. imports of Iranian crude, a trade which has effectively collapsed since the 1990s under the weight of heavy sanctions, according to the U.S. Energy Information Administration.

The move on Monday marks the most sweeping rollback of American oil sanctions against Iran since the 1979 Islamic Revolution, reversing years of pressure designed to cripple Iran’s economy, and is expected to deliver billions in oil revenue for the Iranian regime.

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

“Production, sales, dollar payments, petrochemicals and protected shipping — all switched on at once,” he said. “Together, they amount to a sustained reopening of Iran’s most important revenue stream.”

U.S. President Donald Trump defended the lifting of the sanctions, saying on Monday that any oil profits were meant for Iran to purchase American agricultural goods, rather than rebuild its military.

The latest sanctions relief followed a memorandum of understanding signed last week between the U.S. and Iran. Talks in Switzerland that concluded Monday have yielded positive progress toward a final deal.

Iranian crude exports have picked up in recent weeks as the U.S.-Iran negotiations progressed, with 6.79 million barrels shipped out last week — the highest level in two months — according to maritime intelligence firm Windward.

Iranian crude, which typically trades at a discount to global benchmarks, could also shift to a premium above Brent given demand pressure, further increasing Tehran’s revenue windfall, said Brett Erickson, a managing principal at Obsidian Risk Advisors.

The latest exemption allows Iran to receive oil proceeds directly into its central bank, reducing the transaction costs previously incurred by routing payments through shadow banking intermediaries.

“With dollar clearing now authorized, expect China to accelerate purchases aggressively,” said Maleki. Chinese buyers, in the past, have settled transactions through opaque channels to avoid secondary U.S. sanctions exposure.

The license removes the principal banking friction constraining volume, giving both state refiners and independent refineries, or teapots, access to intermediary banking networks they previously had to circumvent, Maleki said. He expects a rapid storage “top-off cycle” under which Chinese buyers could rush to replenish stockpiles before the exemption expires in August.

China currently purchases roughly 90% of Iran’s oil exports, with teapots accounting for the bulk of China’s imports. The country’s crude imports shrank by an unprecedented 4.8 million barrels per day between February and May — a steeper drop than the 4 mbd decline seen during the depths of the pandemic in the second half of 2020, according to JPMorgan.

Signs of a pickup have yet to materialize, said Muyu Xu, senior oil analyst at Kpler. Buyers are scrambling to assess the new authorization and complete internal compliance reviews — particularly those not previously active in Iranian crude, Xu said.

That said, Chinese buyers’ interest ultimately will rise, though actual procurement would depend on pricing and cargo availability, Xu added.

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