US lifts sanctions on some Iranian oil as gas prices soar

The US has lifted sanctions on some Iranian oil, as it scrambles to contain the impact of its war in Iran on energy markets.

Treasury Secretary Scott Bessent announced the issuing of a narrowly tailored, short-term authorisation permitting the sale of Iranian oil currently stranded at sea.

The move marks a stunning reversal of longstanding American policy - and one with highly uncertain pay-off.

Experts said it was likely to have a limited effect on prices, and could boost funds going to the Iranian regime that the US is attacking. Around the world, energy prices are shooting up as the war takes a toll on shipping and production.

On Friday Bessent said the permit was applicable to the sale of crude oil and petroleum products of Iranian origin currently loaded on vessels.

The authorisation will last until 19 April, the treasury department added.

The treasury secretary said the move would quickly bring about 140m barrels of oil to global markets.

Before the war, China was the primary buyer of the oil coming out of Iran, scooping up the barrels at a steep discount due to sanctions imposed by the US and other countries.

In an interview with Fox Business on Thursday, Bessent said a waiver on sales restrictions could help divert more of those supplies to other countries in need of oil, such as India, Japan and Malaysia, while forcing China to pay "market price".

But Bessent did not go into detail about how the waiver would work or whether it could include rules to prevent money from the sales flowing back to the Iranian government.

"To put it mildly, this is bananas," David Tannenbaum, director of Blackstone Compliance Services, a consultancy specialising in maritime sanctions, told the BBC on Thursday.

"Essentially we're allowing Iran to sell oil, which could then be used to fund the war effort."

President Donald Trump, when asked about whether he would move forward with the idea, did not provide a clear answer, telling reporters on Thursday that "we will do whatever is necessary to keep the price".

The waiver would not have much impact on prices, experts warned.

"I don't think it's a game changer and it raises a whole lot of questions," said Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, a think tank, on Thursday.

Ziemba said she did not think the US would want money from oil sales to go to Iran's government - but it could be hard to prevent in practice.

"The US government is definitely in an every-barrel-counts situation because of the scale of the supply shock," she added. "They're looking to find additional oil wherever they can."

The US has already undertaken other efforts to boost supply, including the release of millions of barrels of oil reserves and the suspension of some sanctions on Russian oil last week.

That second decision sparked significant blowback from leaders in Europe, who said it would strengthen Vladimir Putin's regime and prolong the war in Ukraine.

About a fifth of the 100m barrels of oil that the world consumes every day usually travels via the Strait of Hormuz, which runs along part of Iran's coast. But since the war began at the end of February, shipping in the channel has come to a halt.

While some of the barrels being transported through the strait have been successfully re-routed, experts still estimate that the war has knocked about a tenth of the world's supply out of the market.

Concerns about the situation have increased, as damaging tit-for-tat attacks on a key gas field operated by Iran and Qatar raise the risk that capacity for providing fossil fuels could be constrained for years, even if the conflict is resolved relatively quickly.