US eases sanctions on Iranian oil in a bid to contain energy prices, giving Tehran a boost

In a twist of war, the United States has moved to ease sanctions on Iranian oil to cool rising energy prices, a potential boon for Tehran as Washington struggles to contain the economic shock of its military campaign.

Treasury Secretary Scott Bessent said on Friday that the easing of sanctions, which were first imposed after Iran’s 1979 revolution, it will be “slightly designed” and only temporary, “allowing the sale of Iranian oil that is currently blocked at sea.”

“By temporarily opening this global supply, the United States will immediately bring an estimated 140 million barrels of oil to world markets, increase the amount of global energy and help alleviate temporary supply pressures caused by Iran,” Bessent said.

About 20% of the world’s daily oil flows through the Strait of Hormuz, which runs along part of Iran’s coast. But since the war began at the end of February, shipping to the station has stopped.

Gasoline prices are up 93 cents per gallon and US crude is up more than 70 percent since the start of the year, as political and economic strategies collide.

At current prices, oil major Bessent said the measures to be brought to the market would cost more than $14 billion in Tehran.

Experts say his decision highlights a lack of strategic planning, and warn that such measures are unlikely to make a difference to widespread economic problems.

“The US is funding a war against it,” Danny Citrinowicz, a senior researcher on Iran at the Institute for National Security Studies, affiliated with Tel Aviv University in Israel, told NBC News.

“What we are seeing is a really flawed campaign, not in terms of the size of the operation, but from the preparation of the campaign strategy itself,” he said. “The price of oil is more important than ending this regime in Iran.”

Moritz Brake, head of the Center for Advanced Security, Strategic and Integration Studies, said the decision to ease sanctions on Iran’s oil “points to an underestimation of how Iran will be able to withstand attacks and the consequences for the global economy.”

“The risks have been underestimated,” he told NBC News.

The US has already made other efforts to improve oil supplies, including the release of millions of barrels of oil wells, which is part of a global effort from member countries of the International Energy Agency. Since the beginning of the month, the administration has again lifted the Jones Act, eased shipping regulations, and temporarily lifted sanctions on Russian oil.

Breke noted that the war in Iran had a “double effect” on the war between Russia and Ukraine.

“On the other hand, drone attacks have decreased in Ukraine because Iranian drones are no longer being sent to Russia.” he said. “At the same time, Russia’s war machine is getting more money because of the rise in oil prices and the easing of sanctions.”

Stocks traded higher on Friday as headlines about the war weighed heavily on the market, bringing the worst four-week trading period since April 2025, when the Trump administration’s trade tariffs dominated the news.

Oil prices rose again, with international oil trading (Brent) at around $111, last Friday up 8.3% for the week and 84% for the year.

United Airlines CEO Scott Kirby said in an email to employees on Friday that the company will cancel some flights as it prepares for higher oil prices due to the war with Iran.

“Our projections assume that oil goes to $175/barrel and does not return to $100/barrel until late 2027,” Kirby wrote. “Actually, I think there’s a good chance it won’t be that bad,” he added, but “there’s not much we can do to prepare for that outcome.”

Kirby wrote that some less profitable airlines are expected to be reduced in the short term due to oil prices, such as flagship and red-eye airlines. He said this in his message when he said that the price of jet fuel has doubled in the last three weeks.

“If prices stay at this level, it could mean $11B in annual costs for jet fuel,” he said. “For perspective, in United’s best year, we did less than $5B in revenue.”

Citrinowicz said sanctions relief measures are unlikely to change economic reality.

“Everyone knows that as long as Iran is in power, nothing will change in terms of the ability to extract oil,” he said. “You can’t beat geography.”