The Trump administration is racing to find ways to stanch the run-up in oil prices driven by the war in Iran, as consumers feel the pressure of crude oil hitting $115 a barrel, reflected in higher pump prices.
The United States is undertaking a range of measures meant to lower prices, including releasing emergency oil reserves to ease sanctions on nations like Venezuela and increase global supply.
As international benchmark Brent Crude jumped to nearly $120 per barrel Thursday morning, Treasury Secretary Scott Bessent revealed another tool the administration can use: lifting long-standing sanctions on Iranian oil.
“In the coming days, we may unsanction the Iranian oil that’s on the water,” Bessent told Fox Business, adding that it would affect roughly 140 million barrels of oil.
“Depending on how you count it, that’s 10 days to two weeks of supply,” Bessent said.
The move would mirror the administration’s earlier decision this month to loosen sanctions on Russian oil, freeing up 130 million barrels for global supply.
Under existing sanctions, Iran’s oil has primarily been sent to China. The lifting of sanctions would allow the oil to be transported elsewhere, such as Malaysia, Singapore, Indonesia, Japan, and India, Bessent said.
“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,” the secretary added.
The U.S. has sanctioned Iran’s oil sector for decades, with significant sanctions dating back to the Clinton administration.
The Trump administration’s willingness to ease the sanctions on Iran signals that officials are open to trying every avenue to calm the markets, as the weekslong effective closure of the Strait of Hormuz has sent prices surging more than 40% since the Iran war began.
The Strait of Hormuz is a crucial waterway for global oil and gas trade, with roughly 20 million barrels of crude oil and other oil products passing through the strait daily, equivalent to one-fifth of global oil demand.
Traffic through the strait has dropped by roughly 97%, displacing 180-250 million barrels from global supply, according to analysts.
Iran, however, has allowed for shipments of its own oil to pass through the narrow strait, exporting more than 16 million barrels of crude since the start of the month, according to trade data reviewed by the Associated Press.
While other vessels remain fearful of attacks by Iran in the strait, the U.S. may be forced to lift sanctions to prevent gasoline prices from rising even further, given the market’s influence on domestic prices.
Crude oil is the largest component of the retail price of gasoline, accounting for around 50% of the final price. As of Thursday, the national average price of gasoline had surged to $3.884 per gallon, up from $2.929 per gallon seen one month ago.
Other tactics the administration is using to lower prices include temporarily waiving the Jones Act, a law mandating that goods shipped between U.S. ports be carried only by American-built ships, to lower elevated prices.
Trump officials are also looking to Venezuela to support global supply, and are easing sanctions to incentivize investment and increased production in the oil-rich country.
This week, the Treasury Department’s Office of Foreign Assets Control issued a general license allowing U.S. companies to do business with Venezuela’s state-owned oil and gas firm, PdVSA. This will allow PdVSA to directly sell Venezuelan oil and gas to the U.S.
The U.S. has also taken more traditional routes to ease the Middle Eastern supply disruptions, including participating in the International Energy Agency’s joint release of emergency reserves.
IEA members have agreed to release a record 400 million barrels from stockpiles. The U.S. plans to release 172 million barrels from the Strategic Petroleum Reserve.
Additionally, President Donald Trump has proposed that the U.S. Navy escort oil tankers through the Strait of Hormuz to resume normal energy flows from the region.
That was first proposed at the start of the month, and there has yet to be a single naval escort.
BRENT CRUDE OIL PRICES SURGE AGAIN, NEARING $120
Earlier this week, the Financial Times reported that the administration was considering requiring ships escorted by the US Navy to purchase government insurance from the U.S. before transiting through the strait.
Any naval protection for the ships is not expected to be available for at least another week, sources told the outlet.
Until the strait is opened for normal flows, analysts have warned that oil prices will continue to spike – despite the administration’s efforts.
