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US and UK Issue Temporary Sanctions Waivers for Russian and Iranian Oil to Stabilize Global Markets

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US, UK Issue Temporary Sanctions Waivers for Russian Oil and Iranian Oil

The United States and United Kingdom have issued a series of temporary sanctions waivers on Russian and Iranian oil, reversing prior plans to let authorizations lapse, in a bid to stabilize global energy markets.

US Treasury Extension on Russian Oil

The US Treasury announced a 30-day extension of a general license that allows purchases of Russian seaborne oil, after the previous waiver lapsed on Saturday. The authorization permits temporary access to Russian oil and petroleum products stranded aboard tankers without violating sanctions on Russian oil majors Rosneft and Lukoil.

Key details of the US waiver:

  • The waiver applies to oil loaded on vessels as of April 17, limiting the volume and excluding recently loaded Russian oil.
  • This is the second time the Treasury has allowed the waiver to lapse and then extended it.
  • The Trump administration previously sanctioned Russian oil majors to pressure Russia over the war in Ukraine.
  • The Treasury first issued the temporary license in March after US-Israeli attacks on Iran raised global oil prices.
  • The waivers do not apply to oil currently being pumped by Russia.

Treasury Secretary Scott Bessent stated the measure aims to stabilize the crude market and ensure supply reaches energy-vulnerable countries. Brent crude futures rose approximately 2.6% to over $112 per barrel on Monday amid supply concerns.

"The measure aims to stabilize the crude market and ensure supply reaches energy-vulnerable countries." — Treasury Secretary Scott Bessent

UK Licenses for Russian Oil Products and LNG

On May 19, the United Kingdom issued two licenses related to Russian energy:

  • A license for imports of diesel and jet fuel produced from sanctioned Russian oil in third countries, effective May 20 for an indefinite period, subject to revocation.
  • A license for maritime transport of Russian LNG from Russia's Sakhalin-2 or Yamal terminals, expiring January 1, 2027.

A UK government spokesperson stated the licenses aim to protect critical supply chains and maintain market stability while strengthening sanctions on Russia.

"The licenses aim to protect critical supply chains and maintain market stability." — UK government spokesperson

US Waiver on Iranian Oil

The US Treasury also issued a 30-day waiver for sanctions on Iranian oil purchased at sea. Treasury Secretary Scott Bessent announced the measure, citing a need to ease energy supply pressures.

Key details of the Iranian waiver:

  • A general license permits the sale of Iranian crude oil and petroleum products loaded on vessels between March 20 and April 19.
  • Bessent stated the action will make approximately 140 million barrels of oil available to global markets.
  • The authorization is limited to oil already in transit and does not permit new purchases or production.
  • Bessent stated the policy intends to use Iranian oil to keep prices down while "Operation Epic Fury" continues.
  • The Trump administration previously imposed maximum pressure sanctions on Iran's economy.

Market Context

Since the recent US-Israeli conflict with Iran began, Iran has continued exporting oil, primarily to China, despite US sanctions. The G7 reaffirmed its commitment to sanctions on Russia, including actions against third-country entities supporting Russia's war effort. Ukraine continues to strike Russian oil infrastructure, including a Lukoil refinery and pumping station on May 18-19.

Reactions

  • Democratic Senators Jeanne Shaheen and Elizabeth Warren criticized the US waiver as an "indefensible gift" to President Putin, stating it provides revenue for Russia's war in Ukraine.
  • Analyst Stephanie Connor noted the short-term waivers have unclear impact on US gasoline prices, and British/European sanctions on Russian oil remain.
  • Charles Lichfield of the Atlantic Council said the waivers boost Russia's oil revenues and offset impacts of Ukrainian strikes on Russian refineries.
  • John Foreman of Chatham House called the UK licenses "cynical but understandable," noting it undermines the UK's moral stance as leader of the "coalition of the willing" supporting Ukraine.
  • David Tannenbaum of Blackstone Compliance Services suggested that allowing Iran to sell oil could potentially fund its war efforts.

"This is an indefensible gift to President Putin that provides revenue for Russia's war in Ukraine." — Senators Shaheen and Warren