US Oil Waiver Explained: What It Means for Global Markets

The licence, valid until April 19, excludes regions such as Cuba, North Korea and Crimea. The move is expected to primarily benefit Asian markets, which account for a large share of Middle Eastern oil demand. Energy Secretary Chris Wright, as quoted by Reuters, indicated that shipments could reach Asia within days and enter the market after refining over the coming weeks.

So far, independent refiners in China have been the biggest buyers of discounted Iranian oil, while countries like India, South Korea and Japan were key importers before sanctions tightened in 2018. 

This marks the third such temporary waiver in just over two weeks, following similar steps involving Russian oil, as Washington looks to ease supply constraints and temper prices that have climbed past $100 a barrel.

It is pertinent to note that releasing this oil could help stabilise markets for a short window of around two weeks, while maintaining broader financial pressure on Iran.

Why Does the US Allow Oil? 

America’s decision to permit the sale of sanctioned Iranian oil is largely driven by the ongoing global energy crisis. The conflict that Donald Trump started against Iran, alongside Israel, has severely disrupted shipments through the Strait of Hormuz, a key route that handles about 20% of the world’s oil. 

This disruption has pushed Brent crude prices by over 50% in just a month. “In response to Iran’s terrorist attacks against global energy infrastructure, the Trump Administration will continue to deploy America’s economic and military might to maximize the flow of energy to the world, strengthen global supply, and seek to ensure market stability,” said Bessent. 

He added that the move would help ease supply pressures and will release about 140 million barrels. At present, the US official claimed that sanctioned Iranian oil is being hoarded by China on the cheap. 

“By temporarily unlocking this existing supply for the world, the United States will quickly bring approximately 140 million barrels of oil to global markets… helping to relieve the temporary pressures on supply caused by Iran,” he said, while pointing to broader efforts to boost global energy supply.