Three weeks into the Iran war, the Trump administration has quietly acknowledged it is running out of tools to contain the energy crisis triggered by the conflict. Officials privately estimate higher oil prices could linger for months. The administration has now deployed every conventional policy lever available, including releasing strategic reserves, easing Russian oil sanctions, invoking the Jones Act waiver and accelerating domestic crude flows, and none of it has been enough. The latest and most striking move: lifting sanctions on 140 million barrels of Iranian oil currently loaded on ships at sea, effectively allowing the country the US is at war with to sell its oil on the open market.
The Sanctions Reversal
Treasury Secretary Scott Bessent announced Friday that the Department of the Treasury is issuing a narrowly tailored, short-term authorization permitting the sale of Iranian oil currently stranded at sea. The relief order runs through April 19 and only applies to Iranian barrels already at sea, not new purchases or production. Bessent framed the move as “using the Iranian barrels against Tehran to keep the price down as we continue Operation Epic Fury.”
The political contradiction is significant. Trump spent years criticizing the Obama administration for sending cash to Iran as part of the 2015 nuclear deal. He is now allowing Iran to sell oil at prices more than 40% higher than before the war, generating revenue for the regime while the US military continues bombing it. Administration officials argue the oil would have reached China regardless under existing sanctions workarounds. Sanctions expert Nicholas Mulder of Cornell University said: “The US has to dial back sanctions to offset the second order effect of war.” Democratic Senator Richard Blumenthal called the move “sickeningly, shamefully stupid,” saying it handed Iran “windfall cash” for minimal price relief. (The Hill, Axios)
Why It Will Not Be Enough
The 140 million barrels available at sea is equal to about one and a half days of global oil consumption, according to the US Energy Information Administration. Eurasia Group analyst Gregory Brew said: “If they pursue this strategy and allow buyers to buy off this oil on the water, it’ll go quickly. Then we’ll be faced with the interesting proposal of dropping sanctions on Iranian oil generally.”
Former Trump Energy Department official Neelesh Nerurkar put it plainly: “This is the biggest disruption to the oil markets that you can imagine. The shortfall is so large that the measures available are dwarfed by how much oil is not reaching the market.”
The IEA warned Friday that restoring oil and gas flows from the region could take months or even years. IEA Executive Director Fatih Birol said: “The war in the Middle East is creating a major energy crisis, including the largest supply disruption in the history of the global oil market. In the absence of a swift resolution, the impacts on energy markets and economies are set to become more and more severe.” The IEA has now called on individuals to work from home and avoid air travel as emergency demand reduction measures. (NPR, IEA)
The Options Left
Officials have ruled out restricting oil and gas exports, direct government market intervention and releasing more strategic reserves in the near term. The administration is considering waiving environmental regulations on summer gasoline blends, though experts say the impact would be limited since the waiver has been granted every summer since 2022. No decision has been made. The binary that energy experts describe is stark: find a way to reopen the Strait of Hormuz or accept a prolonged cascade of economic consequences. As former national security official Landon Derentz said: “The nuance here is there isn’t nuance. Nobody else has a bright idea.”
Why This Matters to You
The national average for regular gasoline has risen by nearly a dollar in one month, according to AAA. The administration’s own officials now privately estimate higher prices could last for months. The IEA is asking ordinary people to change their daily routines to conserve energy. These are not abstract policy discussions. They are the lived reality of millions of American households right now.
The decision to lift sanctions on Iranian oil while bombing Iran also raises a fundamental question about policy coherence. The US is simultaneously trying to destroy Iran’s economy and revenue base while allowing it to sell oil at elevated war prices. It is worth thinking about: If the only effective solution is reopening the Strait of Hormuz and no diplomatic or military path to doing so is currently in place, how long can the administration manage the gap between its war aims and their economic consequences? With the IEA warning recovery could take years, are consumers being given an accurate picture of how long this energy disruption may last? And with Iran now deriving financial benefit from a market disruption it created, who is actually winning the economic dimension of this conflict?
-Elijah Iraheta, Editor in Chief, ASC News
