The Trump administration said on Thursday that it planned to remove sanctions on Iranian oil, an unorthodox move intended to lower surging crude prices, which have hurt U.S. consumers and helped Iran profit. The strategy would be a sharp reversal from years of maximum-pressure sanctions aimed to cripple Iran’s economy.
The plan, described by Treasury Secretary Scott Bessent, reflects the administration’s desperation to reduce oil prices, encouraging Iran to sell more oil even while it is at war with the United States.
Since the war started late last month, Iran has continued to export its oil, most of which is sold to China, despite U.S. sanctions. But the confrontation with Iran has revealed an economic paradox: Because the war has caused global oil prices to surge, Iran has actually been profiting from it.
“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,” Mr. Bessent said in an interview on Fox Business, adding that the administration had “lots of levers” and “plenty more” at its disposal.
President Trump said on Thursday that the United States would do “whatever is necessary” to contain oil prices. Speaking at the White House, he said that he knew attacking Iran could affect the U.S. economy but that the war was necessary.
“I wanted to put out that fire,” Mr. Trump said of Iran. “I said if I do that, oil prices will go up, the economy will go down a little bit. I thought it would be worse.”
Mr. Bessent said the sanctions exemption would apply to about 140 million barrels of Iranian oil that were currently at sea. The United States could also do another release of oil from its Strategic Petroleum Reserve to add to global supplies, he said, but ruled out intervening financially in oil futures markets to lower prices.
In an interview with CNBC this week, Mr. Bessent said the United States was allowing Iran fuel ships to travel through the Strait of Hormuz so the rest of the world had sufficient oil supplies.
The plan to remove sanctions on Iran comes a week after the Trump administration temporarily eased sanctions on Russian oil. The United States is also working to ramp up the flow of oil being exported by Venezuela, which it now considers an ally since it arrested President Nicolás Maduro in January and removed him from office.
Mr. Bessent said he hoped that increasing the supply of oil on global markets would make up for what Iran was obstructing through the Strait of Hormuz. He added that the unsanctioned oil could go to countries such as Malaysia, Singapore, Indonesia, Japan and India.
The idea demonstrates that the United States is trying to use every tool at its disposal to contain energy prices. However, it is not certain Mr. Bessent’s plan will work. Removing sanctions on oil that is currently at sea will not increase the flow of production. Iran has proved to be adept at evading U.S. sanctions, suggesting that much of what it exports already reaches buyers.
“Iran will likely profit from these sales, thereby providing more money to fund its regime, the war and its proxies,” said Alex Zerden, the founder of Capitol Peak Strategies and a former official in the Treasury Department’s Office of Terrorism and Financial Intelligence. “I don’t think this stopgap measure will provide the market with assurance.”
Oil prices have been hovering around $100 per barrel since the United States attacked Iran late last month. According to Lloyd’s List Intelligence data, there have been more than 100 cargo transits through the Strait of Hormuz since March 1. Energy analysts have estimated that Iran has earned more than $100 million per day from oil sales since the war started.
“They are making money on this war because the price of oil is going up,” said Robert Pape, a political science professor at the University of Chicago specializing in international security affairs. “That’s just extra money in Iran’s hands.”
Arguing that Iran is an even bigger oil hegemon, he added: “This is why Iran is more powerful today than before the war started.”
Mr. Bessent said sanctioned Iranian oil was currently sold at a discount. It is unclear whether removing the sanctions, which could make oil legal to buy globally, would serve to curb Iran’s profits.
Edward Fishman, a senior fellow and the director of the Maurice R. Greenberg Center for Geoeconomic Studies at the Council on Foreign Relations, said there was not enough oil at sea to make up for the 10 million barrels per day that Iran was obstructing through the Strait of Hormuz. For that reason, he said, oil prices were unlikely to be affected by the easing of sanctions and the incentives for Iran to continue sowing chaos in energy markets would continue.
“For the Iranians, this is further evidence that pushing up oil prices through further attacks on ships and regional oil facilities is their best strategic move,” Mr. Fishman said.
The dilemma for the Trump administration has parallels to what the Biden administration faced four years ago, when it confronted Russia over its war with Ukraine. At the time, the United States and Western allies imposed crippling sanctions on Russia. They initially exempted its energy products in hopes of keeping global prices contained.
Ultimately, a coalition from the Group of 7 nations developed a price cap mechanism that was intended to let Russia keep selling oil but limit its profits. The plan had limited success, as Russia found ways to evade the restrictions with its shadow fleet of tankers.
Ben Harris, who was an assistant secretary for economic policy and the chief economist at the Treasury Department in the Biden administration, said the current situation with Iran was more complicated because the country had shown a willingness to disrupt oil exports from others in the region.
“We didn’t have to worry about Russia blowing up tankers in the straits,” Mr. Harris said, noting that there was no way to ensure that oil could safely travel through the Strait of Hormuz. “If the Iranians are unwilling to facilitate the trade, it’s not going to happen.”
The political calculations that the Trump administration faces are similar to what the Biden administration dealt with in 2022, when oil prices were rising sharply before midterm elections.
“There’s nothing more salient than the price of retail gas,” Mr. Harris said. “The prospect of a global recession is real, and the thing is that it may be entirely out of our hands.”
Mr. Bessent argued on Thursday that U.S. economic growth could still surpass 3 percent in 2026 despite the disruption to energy markets.
“This is temporary,” he said. “We will move beyond this, and we will come out on the other side, and the growth will be better.”
Tony Romm contributed reporting.
Alan Rappeport is an economic policy reporter for The Times, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters.
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