The U.S. weighs lifting Iranian oil sanctions to keep price in check

The White House is considering lifting sanctions on Iranian oil that's at sea to keep oil prices down, Treasury Secretary Scott Bessent said Thursday.

Why it matters: The administration is pulling out all the stops — even easing up an economic threat to its enemy in war — to keep down oil prices.

The latest: The price of Brent crude, the global benchmark, spiked 10% in just the past 24 hours, driving increasing worries among investors.

• Brent is now around $111 per barrel — nearly 60% higher than pre-war levels.

Zoom in: "In the coming days, we may unsanction the Iranian oil that's on the water," Bessent told Fox Business Thursday morning.

• He said that would make up about 140 million barrels — about 10 days to two weeks of supply.
• "In essence, we'd be using the Iranian barrels against the Iranians to keep the price down for the next 10 or 14 days, as we continue this campaign. So, we have lots of levers."

The big picture: The White House has been able for the past few weeks to contain prices with various assurances and policies — promising tanker escorts through the critical Strait of Hormuz, waiving the Jones Act, and temporarily lifting sanctions on Russian oil.

Zoom out Lifting sanctions on Iranian oil would be a remarkable next step — as it was something Iranians were asking for in negotiations last year.

What to watch: "A potential waiver could accelerate the diversion of oil already destined for China into global markets more broadly," a person familiar with the situation who was not authorized to speak publicly told Axios.

• That would help help ensure adequate supply and blunt Iran's leverage over the Strait of Hormuz, this person said.

• Bessent on Thursday explained it this way. If Iranian sanctions lift, "that oil will go up to a market price, and it will end up in places other than China," he said.
• "It can flow into Malaysia, Singapore, Indonesia, Japan, India [which] have been good actors in this."

The bottom line: The administration appears to be conceding something in war that it was unwilling to give in peace, says Nicholas Mulder, a sanctions expert and professor at Cornell University.

• "The U.S. has to dial back sanctions to offset the second order effect of war," he says. "It speaks to the instability of the situation."

Editor's note: This story has been updated with additional details.