US Treasury authorizes Russian oil sales to ease Iran war supply crunch
General License 134 allows temporary sale of sanctioned crude as Strait of Hormuz disruption drives 30% oil price surge
The U.S. Treasury Department has temporarily authorized the sale of sanctioned Russian oil in an effort to stabilize global energy markets rattled by the escalating conflict between the United States, Israel, and Iran. The move comes as oil prices have surged nearly 30% in recent weeks amid severe disruptions to the Strait of Hormuz, the critical waterway through which approximately one-fifth of the world's oil supply passes.
The Office of Foreign Assets Control (OFAC) issued General License 134 on March 12, authorizing the delivery and sale of Russian crude oil and petroleum products loaded on vessels as of that date. The authorization follows an earlier measure, General License 133, issued on March 5 that specifically permitted sales to India for products loaded before March 5.
Treasury Secretary Scott Bessent, who has spearheaded the emergency policy shift, noted that "hundreds of millions of barrels of sanctioned crude are on the water", and that "by unsanctioning them, Treasury can create a supply" to help mitigate soaring prices. The authorization expires on April 11, according to regulatory filings.
The dramatic policy reversal reflects mounting pressure on U.S. officials as the Iran war has increasingly disrupted Persian Gulf energy infrastructure. Tehran's retaliatory attacks across the Gulf region have severely impacted maritime commerce, with the new Supreme Leader Mojtaba Khamenei stating in a Thursday speech that the Strait of Hormuz should remain shut, according to CNBC reporting.
Bessent emphasized that the temporary authorization is aimed strictly at stabilizing global energy markets and should not be interpreted as a broader easing of sanctions pressure on Moscow related to its war in Ukraine. The Treasury chief characterized the move as a necessary response to extraordinary circumstances rather than a shift in long-term policy.
Market reaction to the announcement was mixed, with crude futures paring some of their recent gains but remaining elevated amid ongoing uncertainty about the duration and scope of the Middle East conflict. The temporary nature of the authorization—valid for only one month—has also raised questions about the sustainability of the supply boost if the Strait of Hormuz disruptions persist.
The development marks a significant moment in the intersection of energy markets and geopolitics, with the United States effectively leveraging Russian supplies to counterbalance Iranian aggression in the Persian Gulf. The approach underscores how the Biden administration's Russia policy has become increasingly complicated by the widening regional conflict, forcing difficult trade-offs between maintaining sanctions pressure and preventing broader economic disruption.
Energy analysts will be watching closely for signs that additional sanctions relief may be forthcoming, particularly if oil prices continue to climb toward the $100 per barrel threshold that many economists warn could trigger broader inflationary pressures and slow global economic growth.