War and Oil: US Considers ‘Unsanctioning’ 140 Million Barrels of Iranian Crude to Tame Soaring Prices
As the conflict in the Gulf sends shockwaves through the global economy, the United States is contemplating an emergency measure that would have been unthinkable just weeks ago: temporarily lifting sanctions on nearly 140 million barrels of Iranian crude oil currently stranded at sea. The unprecedented move is being framed as a “break-the-glass” option to inject immediate supply into a market reeling from the effective closure of the Strait of Hormuz.
With global oil prices surging past $100 per barrel, the Biden (or hypothetical administration) is scrambling to contain the economic fallout. Treasury Secretary Scott Bessent revealed in a recent interview that the administration is actively considering “unsanctioning” the vast quantity of Iranian oil sitting on tankers, a cache he estimates represents roughly 10 to 14 days of global supply.
The Floating Stockpile: A Temporary Fix
The oil in question is part of a shadow fleet of vessels used by Iran to store and transport crude that, due to stringent US sanctions, has been unable to find buyers in the formal market. For years, much of this oil has been sold covertly, often to China at steep discounts. By lifting sanctions, the US aims to flood the physical market with supply, forcing prices down.
“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 stated, highlighting the irony of using an adversary’s resources to stabilize the market during active conflict . The logic is simple: if the threat of strikes and insurance risks have halted shipping through the Strait of Hormuz—a chokepoint for 20% of the world’s oil—then bringing oil that is already “on the water” to market could bypass the logistical gridlock.
A Multi-Pronged Strategy to Cool Prices
This potential policy reversal is not happening in a vacuum. It is part of a broader, multi-pronged strategy by Washington to prevent a full-blown energy crisis.
-
Strategic Petroleum Reserve (SPR): The Department of Energy has already authorized the release of 172 million barrels from the US Strategic Petroleum Reserve as part of a coordinated 400-million-barrel action with 31 other International Energy Agency (IEA) member nations . Bessent has signaled that the US is prepared to conduct a further, unilateral release from the SPR if necessary to keep prices in check .
-
Physical Market Focus: Bessent was emphatic that the administration is drawing a clear line between physical and financial intervention. “We are not intervening in the financial markets. We are supplying the physical markets,” he clarified, ruling out direct manipulation of futures markets .
-
Diplomatic Outreach: The US is engaging with major allies like Japan, which relies heavily on Gulf oil. Talks are underway regarding the Japanese navy potentially helping to secure safe passage through the Strait of Hormuz, which could allow normal shipping flows to resume .
The Irony and the Risk
The move is laden with geopolitical irony. As noted by analysts, the Trump administration spent years building a “maximum pressure” campaign specifically designed to cut off Tehran’s primary revenue stream . To now consider handing Tehran a financial windfall—by allowing its oil to trade openly at full market rates—represents a stunning reversal forced by the very conflict the US initiated .
Critics argue that any revenue generated for Iran could be used to fund the very proxies and military actions the US is trying to suppress. However, the administration’s immediate concern appears to be the pain at the pump and the stability of the global economy. The deficit created by the Hormuz disruption is severe, estimated at 10 to 14 million barrels per day, a gap that cannot be filled by diplomacy alone.
Also Read: Experts Examine Kidney Health Risks Linked to Excessive Protein Powder Intake
A Fragile Calm
While the injection of 140 million barrels could provide a short-term buffer, experts at firms like AEGIS Hedging caution that the underlying tensions remain . The Energy Information Administration (EIA) has drastically revised its price outlook, viewing the conflict as a severe logistical shock. Even if this oil hits the market, it is a temporary salve. The global market is expected to return to a state of surplus only if and when shipping through the Gulf normalizes .
For now, the world watches as the US prepares to unsanction its enemy’s oil, hoping that this emergency measure can buy enough time to prevent a price spike from tipping the global economy into recession.
