Trump Gambled by Easing Oil Sanctions on Iran and Russia. Will It Pay Off?

By starting this war, the Trump administration has created a supply shock that has forced the United States to provide temporary sanctions relief to Iran, the country it is fighting against, as well as a belligerent Russia. Despite the administration’s attempt to downplay the benefits the two countries will receive, sanctions relief will likely result in increased revenue for Iran and could result in Russia receiving $3.3 to $5 billion in additional oil revenue in March.

The White House’s frantic unwinding of U.S. sanctions on two adversaries to contain the fallout of its own war should prompt a hard reassessment of the costs of oil sector sanctions, which have failed to produce their intended objectives. Instead, the temporary sanctions relief comes with real costs that directly undermine U.S. national security interests. The administration’s stated objective was to drive down Iranian oil exports to zero through maximum pressure sanctions, and yet Iran found ways to sell its oil on the black market anyway. Now the United States has issued sanctions relief that might deliver Tehran a windfall to fund the very war machine it is fighting against. The Russia case is similarly paradoxical. The Trump administration claims to be pressuring Russia to reach a peace deal with Ukraine, but it has now handed Moscow a financial lifeline the Kremlin can use to prolong the war.

Trump officials have justified the waivers by saying they would add supply to the market and push prices down, but this unwinding has done the opposite. The waivers have turned Iran and Russia from price-takers into price-setters and left global prices higher than before.

The White House temporarily eased sanctions on Iran and Russia by issuing waivers through the Treasury Department’s Office of Foreign Assets Control (OFAC). The most impactful waivers, which focus on Iranian and Russian crude oil already loaded on vessels, are:

Both waivers are limited to crude oil and petroleum products that were already loaded on vessels on or before the issuance date. Neither of the OFAC waivers include any payment restrictions, price caps, or reporting requirements. Although OFAC has not issued guidance explaining how the GLs interacts with the existing price cap on Russian oil, GL 134A effectively suspended the cap on Russian oil for covered cargoes for U.S. persons.

This price cap was established in December 2022 by an international coalition of countries—including the United States, Group of Seven (G7) countries, the European Union, and Australia—to limit Russia’s oil revenue that could be used to fund its war against Ukraine without disrupting global oil flows. OFAC’s price cap guidance authorizes U.S. persons to provide covered services related to the maritime transport of Russian oil and petroleum products, as long as those products are purchased at or below the relevant price cap. OFAC has issued determinations setting a price cap [PDF] on Russian origin crude oil and a price cap [PDF] on Russian origin petroleum products.

Despite the changes these waivers have made to U.S. sanctions policy and the global energy market, oil prices have only continued to rise and given Iran and Russia a new opportunity to line their coffers. Meanwhile, the White House is reportedly preparing for oil to hit $150 per barrel or higher, which would further stress the global economy.

We are seeing the benefits for Iran and Russia grow in real time. Indian refiners agreed to purchase about sixty million barrels of Russian oil at premiums of between $5 and $15 above the price of Brent crude, the global benchmark for oil. Other countries, particularly ones in Asia, have agreed to buy Russian crude or petroleum products, including U.S. allies like the Philippines and South Korea. According to the Financial Times, with the war and OFAC’s waiver boosting the price of Urals crude, Russia’s flagship blend, Russia might have received an additional $150 million per day of oil revenue. If accurate, that would add up to an extra $3.3 to $5 billion for Russia in the month of March alone. Prior to the waivers, Moscow had been forced to offer buyers a discount because sanctions redirected Russian oil to more distant markets, raising shipping costs while leaving China and India as the primary large buyers—giving them the bargaining power to push prices down further.

Despite the administration’s claim that the Iranian waiver would add 140 million barrels to the market, the majority of the Iranian oil on the water was already in transit, meaning only a relatively small portion of Iranian crude on vessels was in floating storage. Reports indicate that Indian refineries are starting to buy Iranian crude. According to data analytics company Kpler, Iranian sellers withdrew offers anticipating higher prices after U.S. Treasury Secretary Scott Bessent signaled sanctions relief, while Asia’s biggest refiner publicly said it will not buy Iranian crude and China’s teapot refineries remain well supplied for now.

There is also uncertainty over Iranian-specific restrictions that remain in place and what would happen to incomplete transactions after the waiver expires on April 19. The absence of any payment restrictions in GL U is notable. When Trump withdrew from the Iran nuclear deal in 2018, the deal’s sanctions relief still required oil payments to be held in escrow accounts in local currency and limited to humanitarian trade. The Iranian waiver has failed to add supply to the market due to most of the crude already being in transit. As for the crude in floating storage, it appears Iran is holding out for higher prices while buyers are reluctant to make a deal with the Islamic regime.

But Trump administration officials have defended the policy changes, insisting the temporary lifting of sanctions would deliver lower oil prices without substantially benefiting Moscow and Tehran.

Bessent described the Russian sanctions relief as a “narrowly tailored, short-term measure [that] applies only to oil already in transit and will not provide significant financial benefit to the Russian government.” In an interview with Fox News on March 19, he noted there were 130 million barrels of Russian oil on the water in floating storage, which could be used to bring prices down.

On the Iranian side, Bessent described the goal as using “the Iranian barrels against the Iranians to keep the price down for the next ten or fourteen days,” with about 140 million barrels of Iranian oil on the water. Upon issuing the Iran waiver, he stated Iran would “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.” The Treasury Secretary argued the sanctions relief would create “about 260 million excess barrels of energy” to stabilize markets and offset supply disruptions for about three weeks. That excess has not yet been realized.

The sanctions relief has drawn rare bipartisan criticism from Congress. Republicans warned the move would enrich adversaries and validate Iran’s closure of the Strait of Hormuz. Democrats, meanwhile, called the moves reckless and argued the administration was funding the very enemies it was fighting.

Regardless, the White House is caught in a trap of its own making if the April expiration dates arrive without lower oil prices. The Trump administration will soon face a difficult choice that will now be scrutinized by both sides of the aisle: double down by renewing the waivers that benefit U.S. adversaries or reimpose sanctions on a market the United States helped destabilize.

This work represents the views and opinions solely of the author. The Council on Foreign Relations is an independent, nonpartisan membership organization, think tank, and publisher, and takes no institutional positions on matters of policy.