Oil tanker Bruges anchored off the coast of Long Beach Harbor on Thursday, May 7, 2026, in Long Beach, California, USA.
Tim Lu | Bloomberg | Getty Images
The United States announced a major lifting of sanctions on Iranian oil, allowing dollar-denominated trade for the first time in more than 40 years, as Washington and Tehran advance in fragile negotiations toward a permanent peace deal.
The U.S. Treasury on Monday granted Iran a broad 60-day waiver that allows it to produce and sell crude oil, petrochemicals and petroleum products in U.S. dollars until Aug. 21.
Under the so-called General License X, vessels and entities previously subject to U.S. sanctions are also allowed to trade. The waiver would theoretically reopen the door to U.S. imports of Iranian crude, a trade that has effectively collapsed under the weight of tough sanctions since the 1990s, according to the U.S. Energy Information Administration.
Monday’s action is the most sweeping lifting of U.S. oil sanctions on Iran since the 1979 Islamic Revolution, reversing years of pressure aimed at paralyzing Iran’s economy and expected to bring billions of dollars in oil revenue to the Iranian regime.
Miad Maleki, a former Treasury Department sanctions official and now a senior fellow at the Foundation for Defense of Democracies, a Washington-based think tank, said the permit could free up some 67 million barrels of Iranian crude oil floating in the Gulf, giving Iran a windfall of $8 billion to $9 billion.
“Production, sales, dollar disbursements, petrochemicals and secured transportation all operated simultaneously,” he said. “Taken together, this amounts to the continued restart of Iran’s most important source of income.”
US President Donald Trump on Monday defended the lifting of sanctions, saying Iran’s oil profits were meant to buy US agricultural products rather than rebuild its military.
The sanctions relief was based on a memorandum of understanding signed last week between the United States and Iran. Talks in Switzerland, which concluded on Monday, made positive progress towards a final agreement.
Iranian crude oil exports have increased in recent weeks as negotiations between the United States and Iran progress, with 6.79 million barrels shipped last week, the highest level in two months, according to maritime information firm Windward.
Obsidian Risk Advisors managing principal Brett Erickson said Iranian crude, which typically trades at a discount to global benchmarks, could move to a premium over Brent given demand pressures, further increasing revenue for the Iranian government.
shadowy network
The latest exemption will allow Iran to receive oil revenues directly to the central bank, reducing transaction costs previously incurred by routing payments through shadow banking intermediaries.
“With the approval of dollar payments, we expect China to aggressively accelerate its purchases,” Maleki said. Chinese buyers have traditionally settled transactions through opaque channels to avoid the impact of secondary U.S. sanctions.
Maleki said the license removes a major banking friction constraint, allowing both state refineries and independent refineries, or teapots, to access intermediary banking networks that they previously had to circumvent. He expects a “top-off cycle” of rapid storage, with Chinese buyers likely rushing to replenish inventory before the August exemption expires.
China currently buys about 90% of Iran’s oil exports, and teapots make up the bulk of China’s imports. The country’s crude oil imports fell by an unprecedented 4.8 million barrels per day (mbd) from February to May, according to JPMorgan. This is a sharper decline than the 4 million barrel decline seen in the second half of 2020 at the height of the pandemic.
Muyu Xu, senior oil analyst at Kpler, said signs of economic recovery have not materialized yet. Xu said buyers, especially those that have not been active in dealing in Iranian crude in the past, are scrambling to evaluate new permits and complete internal compliance reviews.
Having said that, Xu added that while the actual procurement will depend on pricing and cargo availability, there will ultimately be more interest from Chinese buyers.
Michael Ferrer, chief strategist at Geostrategy, said Iran is likely to use the 60-day grace period to repair war-damaged oil facilities and lock in long-term contracts with Chinese buyers. “This will be a huge boost for Iran, both economically and in terms of its sense of victory.”
