by Asad Mirza
The US decision to ease sanctions on Iranian oil may stabilise global supply and benefit India, but raises strategic contradictions and could strengthen Iran economically.
The decision last week by the United States to temporarily ease sanctions on Iranian oil shipments already at sea sparked immediate reactions on social media. Apparently, the hasty American move is viewed by experts as cooling surging global energy prices amid the ongoing West Asia conflict. However, in the current scenario, India stands to benefit from this move, and it may ease pressure somewhat on the Indian demand side.
The US decision to temporarily ease sanctions on Iranian oil shipments already at sea sparked online reactions. Iran’s Parliament Speaker, Mohammad Bagher Ghalibaf, mocked the move on X, writing: “Lifting sanctions on Iranian oil currently stranded at sea? Sorry—we’re sold out.”
Treasury Secretary Scott Bessent on Friday (March 20) framed the move as “using the Iranian barrels against Tehran to keep the price down as we continue Operation Epic Fury.”
“Iran will have difficulty accessing any revenue generated, and the United States will continue to maintain maximum pressure on Iran and its ability to access the international financial system,” he wrote on X.
Highlighting the rationale behind the decision, Bessent noted that the measure would help ease supply pressures.
According to CNN, the 30-day waiver could bring about 140 million barrels of oil into global markets. Oil prices have climbed roughly 50% to more than $100 a barrel, their highest level since 2022, raising concerns in the White House about the impact on businesses and consumers ahead of the November midterm elections.
Bessent said the temporary measure could help stabilise supply and reduce price pressures. In a statement posted on X, he said the US was “temporarily unlocking this existing supply for the world” to counter disruptions linked to the conflict.
The licence also states that Iranian oil could be imported into the United States, if necessary, to complete sales or deliveries, though it remains unclear whether any shipments will actually reach US ports. Regions such as Cuba, North Korea, and Crimea are excluded from the licence, reports CNN.
The Rationale
However, the optics of the American decision are rather discomfiting. Though the US’s avowed aim is to decimate the Iranian regime militarily, this move would instead allow the Iranian regime to benefit financially. It presents a unique paradox: helping an adversary financially to stabilise domestic conditions while simultaneously countering another rival, i.e., China.
Further, it is also a tacit acknowledgement of the intense economic and political pressure that Iran has exerted on the US by closing the Strait of Hormuz.
Reportedly, American officials warmed to the idea in recent days. They have argued that this oil would have eventually been purchased by China in spite of US sanctions. Instead, US allies could buy it, easing their immediate supply concerns at only a slightly higher price than China would otherwise have paid Iran.
As for President Donald Trump, the dynamics are particularly awkward. After repeatedly criticising former President Barack Obama for sending cash to Iran as part of the nuclear deal, Trump is now effectively encouraging Iran to step up its oil sales.
Further, through this move, the US might have increased competition for Iranian barrels among other countries and China. While it may lead to the end of discounts on Iranian oil, importing countries would still be keen, as in the current scenario, supply security is being prioritised over price considerations.
A Boon for India
The US move could help Indian refiners capitalise on the opportunity, just as they did by ramping up imports of Russian crude in recent weeks. Amid tight global supply, every barrel counts.
Around 2.5–2.7 million bpd of India’s crude imports, around half of total imports, have transited the Strait of Hormuz in recent months, while the longer-term average is around 40 per cent. India depends on imports to meet over 88 per cent of its crude oil requirement. Globally, around 20 million barrels per day of crude oil usually pass through the Strait of Hormuz.
India has not imported any oil from Iran since May 2019, after the expiration of the sanctions waiver provided by the US to major buyers of Iranian oil. Non-compliance with American sanctions would have made Indian oil companies vulnerable to secondary sanctions from Washington. Before that, India had been a regular buyer of Iranian oil, even during earlier sanctions periods, when volumes declined but were still significant.
Apparently, this move could be described as a calculated strategy by the Trump administration, killing not two but several birds with one stone.
Firstly, the general licence allows some Iranian oil to be sold to American companies, easing pressure on the US economy. Secondly, it could curb supplies reaching China, thereby pressuring its economy. Thirdly, it may ease global supply constraints and reduce prices, benefiting US allies. Lastly, it could also affect the sale of Russian oil in global markets.
However, the decision does not appear entirely pragmatic; rather, it seems hasty, and ultimately may benefit Iran more than the US.
As reported by The Wall Street Journal, the value of Iran’s currency rose on Saturday (March 21). The rial strengthened by 6.7 per cent to 1.559 million per US dollar. The rial had been declining since the beginning of the war, and this marks its first significant uptick.
This represents an immediate gain for Iran; further benefits may accrue in the long run. Apparently, the broader Iranian strategy compelled the US to take such a decision, suggesting that Iran may hold a relative advantage in the ongoing conflict.
(The writer is a New Delhi-based senior commentator on national, international, defence and strategic affairs, environmental issues, an interfaith practitioner, and a media consultant. Ideas are personal.)
