Trump administration allows for Russian oil sales as energy prices soar

The Trump administration on Thursday night temporarily lifted sanctions on Russian oil shipments in an effort to calm markets and stem the economic fallout from its war on Iran, which has sent crude prices spiraling upward.

A general license issued by the Treasury Department allows Russia to begin selling some 128 million barrels of oil that are estimated to have already been loaded onto tankers previously sanctioned by the United States. The license expires after 30 days.

“To increase the global reach of existing supply, @USTreasury is providing a temporary authorization to permit countries to purchase Russian oil currently stranded at sea,” Treasury Secretary Scott Bessent posted Thursday night on X. “The temporary increase in oil prices is a short-term and temporary disruption that will result in a massive benefit to our nation and economy in the long-term.”

On Thursday, futures for Brent crude oil closed at just above $100 a barrel for the first time since 2022.

The move will provide a huge financial boost to Russia, which experts say has already been receiving about $150 million per day from increased oil sales since the U.S. attacked Iran two weeks ago.

It is certain to draw a rebuke from congressional Democrats, who attacked the administration for easing sanctions on Russian oil earlier this month, which allowed limited sales only to India. The latest license is far more expansive, permitting sales anywhere in the world.

“This self-made global energy shock is serving to enrich [Russian President Vladimir] Putin and line his war coffers by offering him windfall profits,” several Senate Democrats said in a statement on March 6. “Instead of changing course, the President is only making this situation worse by handing Putin, his shadow fleet, and traders still dealing in sanctioned oil a free pass to increase oil shipments to Russia’s second-largest importer. The new channels for evasion the President is opening, coupled with dramatically higher global energy prices, are giving Putin a huge financial boost and the means to continue his bloody war in Ukraine.”

The lifting of the sanctions positions Putin as one of the biggest beneficiaries of President Donald Trump’s war on Iran. Sanctions were imposed on Russian oil in response to the country’s 2022 invasion of Ukraine, part of an effort by the U.S. and the European Union to pressure Russia to withdraw its forces as NATO countries invested heavily in helping Ukraine repel the invasion.

Another beneficiary could be Iran, experts say, because its government and independent militias probably own many of the tankers that make up a “shadow fleet” of hundreds of vessels currently holding Russian oil. This fleet is designed specifically to evade sanctions. It is made up of older, less reliable vessels that sailed uninsured and used radar-jamming devices and other techniques to avoid detection.

Now, the U.S. government has granted them legitimacy — for at least 30 days.

“This just underscores how Russia is the biggest winner in this conflict,” said Brett Erickson, managing principal at Obsidian Risk Advisors, a consultancy that specializes in financial crime and regulatory issues. “It shows we were really not prepared for this war. We underestimated the length the Iranians were willing to go with the Strait of Hormuz.”

That narrow strait, which connects the Persian Gulf to the Gulf of Oman and the Arabian Sea, is a chokepoint for about one-fifth of the world’s oil supply. Shipping traffic through it has been effectively halted since the start of the war, as Iran attacks vessels that attempt to sail through. Shipping companies have ordered their tankers in the area idled, and the U.S. has been unable to secure the strait, despite assurances that it would provide risk insurance and possibly even provide military escorts at some point in the future.

With no sign that the strait will be safe for shipping traffic anytime soon, oil prices have continued to rise. They have already reached the point where they are likely to push the average cost of a gallon of gasoline past $4 in the U.S. Diesel prices in some states have soared more than $1 in the past week.

The longer the strait stays closed, the larger the economic fallout. Gulf State oil companies are already being forced to ramp down operations, as they are running out of places to store the oil they pump. Once facilities are shut down completely, it can take weeks to get them back up and running.

Despite Trump declaring the war on Iran has effectively been won by the U.S., it has not been able to get the strait reopened for business. Iran has started laying sea mines and is threatening to continue its attacks. Administration officials have acknowledged that the military ships Trump had suggested could be available to escort tankers are unavailable because they are being used in battle. And experts question whether escorting the ships that normally sail through the strait is logistically feasible or financially viable.

Adding to the challenge are the complexities of drone warfare. Iran’s relatively inexpensive drones can inflict relentless damage on tankers and energy infrastructure in the region, despite the massive U.S. military presence in the area.

It has all sent global energy markets into turmoil, with no sign of calming. “The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” the International Energy Agency said in a report Thursday.

The U.S. and its allies have few remaining tools to keep oil prices from surging as the strait remains cut off. On Wednesday, they approved a historic release of oil from emergency reserves, including 172 million barrels from the U.S. Strategic Petroleum Reserve. But the release will backfill only a fraction of the oil that typically moves through the strait. Prices have continued to push upward since the release was announced.