The U.S. has issued its most sweeping rollback of Iran oil sanctions since the 1979 Islamic Revolution, allowing dollar-denominated crude trade for the first time in over four decades.
The U.S. Treasury issued a wide-ranging 60-day exemption on Monday permitting Iran to produce and sell crude oil, petrochemical, and petroleum products in U.S. dollars through Aug. 21.
Under the so-called General License X, vessels and entities previously subject to U.S. sanctions are also cleared for transactions under the new framework.
The waiver theoretically reopens the door to U.S. imports of Iranian crude, a trade that has effectively collapsed since the 1990s under the weight of heavy sanctions, according to the U.S. Energy Information Administration.
The license could unlock a floating inventory of around 67 million barrels of Iranian crude currently stranded in the Gulf, representing an enormous potential financial windfall for Tehran.
Miad Maleki, a former Treasury sanctions official and senior fellow at the Foundation for Defense of Democracies, estimates that windfall at between $8 billion and $9 billion.
“Production, sales, dollar payments, petrochemicals and protected shipping — all switched on at once,” Maleki said. “Together, they amount to a sustained reopening of Iran’s most important revenue stream.”
President Donald Trump defended lifting the sanctions, saying on Monday that any oil profits were intended for Iran to purchase American agricultural goods rather than rebuild its military.
The sanctions relief followed a memorandum of understanding signed last week between the U.S. and Iran, with talks in Switzerland concluding Monday showing positive progress toward a final deal.
Iranian crude exports have already picked up in recent weeks as negotiations progressed, with 6.79 million barrels shipped out last week, the highest level in two months, according to maritime intelligence firm Windward.
Brett Erickson, a managing principal at Obsidian Risk Advisors, noted that Iranian crude, which typically trades at a discount to global benchmarks, could shift to a premium above Brent given demand pressure, further increasing Tehran’s revenue windfall.
The exemption allows Iran to receive oil proceeds directly into its central bank, reducing transaction costs previously incurred by routing payments through shadow banking intermediaries.
“With dollar clearing now authorized, expect China to accelerate purchases aggressively,” Maleki said, noting Chinese buyers previously settled transactions through opaque channels to avoid secondary U.S. sanctions exposure.
China currently purchases roughly 90% of Iran’s oil exports, with independent teapot refineries accounting for the bulk of Chinese imports from Tehran.
China’s crude imports shrank by an unprecedented 4.8 million barrels per day between February and May, a steeper drop than the 4 million barrel per day decline seen during the depths of the pandemic in the second half of 2020, according to JPMorgan.
Muyu Xu, senior oil analyst at Kpler, said signs of a pickup have yet to materialize, as buyers scramble to assess the new authorization and complete internal compliance reviews.
Xu noted that Chinese buyers’ interest will ultimately rise, though actual procurement would depend on pricing and cargo availability once compliance reviews are completed.
Michael Feller, chief strategist at Geopolitical Strategy, said Iran will likely use the 60-day window to repair war-damaged oil facilities and lock in longer-term contracts with Chinese buyers. “This will be a huge boost to Iran, both to its economy and its sense of victory.”
