US Considers Emergency Move to Release Stranded Iranian Oil Amid Gulf Conflict
The Trump administration is actively evaluating a significant policy shift that could see sanctions lifted on approximately 140 million barrels of Iranian oil currently trapped on tankers. This emergency measure aims to inject much-needed supply into the global market and help cool surging crude prices, which have remained stubbornly above $100 per barrel for much of the past two weeks. The move comes as the ongoing war in the Gulf region continues to severely hammer energy infrastructure and critically disrupt shipping through the vital Strait of Hormuz.
Treasury Secretary Signals Imminent Action on Sanctions
US Treasury Secretary Scott Bessent provided a clear signal of the administration's intentions during an appearance on Fox Business Network's Mornings with Maria programme. "In the coming days, we may unsanction the Iranian oil that's on the water. It's about 140 million barrels," Bessent stated. He framed this potential action as a direct response to the severe supply shock caused by the closure of the Strait of Hormuz, which he estimated has created a daily deficit of 10 to 14 million barrels in the physical oil market.
Bessent emphasized that this is not an intervention in financial markets but a focused effort to supply physical markets. "So, to be clear, we’re not intervening in the financial markets. We are supplying the physical markets," he clarified, as reported by Reuters. He further stressed that the Treasury would "absolutely not" intervene in oil futures markets, concentrating solely on steps that increase actual, tangible supply.
A "Break the Glass" Energy Security Plan
Describing the administration's broader strategy, Bessent referred to it as a "break the glass plan" being executed across the Treasury and the wider executive branch to manage immediate energy security risks. The stranded Iranian crude represents roughly 10 to 14 days of supply that Iran had been shipping, much of which was previously destined for China.
"In essence, we will 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," Bessent explained, highlighting the tactical nature of the move. He also indicated that the administration retains "lots of levers" and "plenty more that we can do" to influence global energy pricing should the crisis deepen further.
Broader Emergency Measures Under Consideration
Alongside the possible easing of sanctions on Iranian oil, the administration is also weighing another release from the US Strategic Petroleum Reserve (SPR). Bessent noted that the US could undertake a unilateral SPR release in addition to last week's coordinated G7 release of 400 million barrels, which he called the "largest coordinated SPR release in history."
He drew a parallel to a recent US decision to allow the sale of sanctioned Russian oil stranded on tankers, which added around 130 million barrels to global supplies. "We un-sanctioned Russian oil. We knew that there were about 130 million barrels on the water and we created supply that is beyond the Strait of Hormuz," Bessent said, illustrating a precedent for such emergency actions.
Gulf Attacks Intensify Global Energy Price Shock
The discussion over these emergency supply measures unfolds against a backdrop of escalating conflict in the Gulf, which is hitting critical energy assets and sending oil and gas prices sharply higher. On Thursday, Brent crude jumped nearly 10 percent to $118 a barrel, while European natural gas prices surged as much as 30 percent following tit-for-tat attacks across the Persian Gulf.
The attacks have been widespread and damaging:
- Qatar reported that Iranian attacks damaged gas sites, including the Ras Laffan terminal, the world's largest liquefied natural gas facility.
- Drone attacks caused fires at two state-owned refineries in Kuwait.
- A drone fell at a major Saudi export terminal.
- The UAE stated it had responded to incidents at gas facilities and an oil field caused by debris from missile interceptions.
Oil prices have stayed elevated primarily because Iran has closed the Strait of Hormuz to shipping and attacked tankers, compounding fears of a sustained supply crunch.
US Presses Allies to Secure Vital Shipping Lanes
In his remarks, Bessent also pressed US allies to take a more substantial role in securing shipping lanes through the Strait of Hormuz. He noted that while the US is now an oil exporter, many allies are heavily dependent on Gulf oil. "When President Trump says our allies should join us in a coalition along the straits of Hormuz, they’re the ones who need this oil," Bessent stated.
He added it would be "very disappointing for those who benefit the most not to do something" to help escort ships through the strait. US President Trump was scheduled to meet Japanese Prime Minister Sanae Takaichi at the White House to discuss Japan's possible naval role in ensuring safe passage for vessels, given Japan's significant dependence on Gulf oil. "She's very pro-US I think we're going to have a very good discussion today," Bessent said of Takaichi.
Widening Military Campaign Deepens Market Anxiety
The energy emergency is unfolding alongside a widening military campaign that adds to market anxiety. US Defence Secretary Pete Hegseth reported that the US military had struck more than 7,000 targets in Iran since the war began nearly three weeks ago, damaging or sinking more than 120 Iranian navy ships and leaving its military ports "crippled."
"We’re winning decisively and on our terms," Hegseth asserted, though he declined to specify when the conflict might conclude. European leaders have grown increasingly alarmed by the strikes on energy infrastructure. French President Emmanuel Macron warned in Brussels that the escalation was "reckless" and that the destruction of production facilities could prolong the war's economic fallout, highlighting the interconnected risks to global stability and energy markets.
