The United States on Thursday temporarily lifted sanctions on Russian oil that is currently at sea, allowing it to be shipped to buyers around the world as the Trump administration scrambles to contain energy prices that have been soaring because of the war in Iran.
The New York Times reported that the new exemptions will be in place until April 11. The U.S. initially placed sanctions on Russian oil as a means of exerting economic pressure on the country to end its war in Ukraine.
Treasury Secretary Scott Bessent estimated that freeing Russian oil could add hundreds of millions of barrels of crude to global markets, curbing prices that have been hovering near $100 per barrel as a result of the Iran conflict.
The decision was a significant turning point in America’s effort to punish Russia for its war in Ukraine.
The price of a barrel of oil was hovering around $95 at the end of Thursday’s trading session, which represents a more than 48% increase since late February.
“The lifting of oil sanctions represents a sharp reversal from last summer, when the administration doubled tariffs on India as punishment for its purchases of oil from Russia,” the report reads in part.
NYT said as President Trump’s war with Iran has unfolded, his administration has looked for ways to mitigate the economic pain. His administration temporarily freed Russian oil last week that was sitting at sea and was set to be delivered to India. It is also in the process of offering a $20 billion maritime insurance backstop through the U.S. International Development Finance Corporation, an agency that generally lends to and invests in overseas companies and projects.
Mr. Bessent asserted on Thursday that Russia would not benefit significantly from the sanctions relief but acknowledged that Moscow would see some financial benefit.
“To increase the global reach of existing supply, Treasury is providing a temporary authorization to permit countries to purchase Russian oil currently stranded at sea,” he wrote in a social media post. “This narrowly tailored, short-term measure applies only to oil already in transit and will not provide significant financial benefit to the Russian government, which derives the majority of its energy revenue from taxes assessed at the point of extraction.”
In a podcast interview on Thursday, Mr. Bessent said that it was “unfortunate” that Russia stood to gain financially from the conflict in Iran but that he hoped it would benefit for only a “micro period.”
Top Senate Democrats assailed the Trump administration for easing sanctions on Russia, saying that it was done to mitigate a war of Mr. Trump’s own making.
“This war has resulted in huge spikes in gas prices for Americans, who are now paying more at the pump than at any point in either of President Trump’s two terms,” they wrote in a joint statement.
The lifting of oil sanctions represents a sharp reversal from last summer, when the administration doubled tariffs on India as punishment for its purchases of oil from Russia.
“In one fell swoop we’ve undone a huge amount of pressure on Russia,” said Edward Fishman, a senior fellow and director of the Maurice R. Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations.
About 130 million barrels of Russian oil is currently at sea, according to the commodities data tracking service Kpler.
The move by the Trump administration could further divide the United States and Europe, which has been skeptical of Mr. Trump’s attack on Iran and has expressed a desire to continue to exert economic pressure on Russia.
Mr. Fishman said he did not think that easing the Russia oil sanctions would lower prices, noting that the move last week to let Russian oil be delivered to India did not have an impact. He noted that the price of Russian oil had been rising since the war in Iran started, and that it was likely that the sanctions relief could be extended indefinitely.
“I do worry that this is effectively the destruction of the oil sanctions on Russia,” said Mr. Fishman, the author of “Chokepoints: American Power in the Age of Economic Warfare.”
