The United States has temporarily lifted sanctions on Iranian oil exports as negotiations progress to end the lengthy conflict that has disrupted the global energy market. Historically, President Donald Trump sought to impose strict sanctions on Iran’s trade, a strategy consistent since he withdrew from the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal in 2018. These sanctions have limited Iran’s export opportunities to a few buyers, mainly China, forcing Tehran to offer discounts and engage in costly workaround methods.
The U.S. Treasury Department announced a new license that allows the production, delivery, and sale of Iranian-origin crude oil, petrochemical products, and petroleum products until August 21, 2026. This decision has the potential to significantly boost Iran’s access to the global economy.
Brett Erickson, a geopolitics expert at Obsidian Risk Advisors, estimates Iran could earn $37.4 million to $51 million per day, totaling approximately $2.24 billion to $3.06 billion over the 60-day waiver period, if they sell their available oil. He notes that the waiver boosts profits for an existing revenue stream, rather than creating a new one.
Behind the Numbers
Erickson evaluates Iran’s oil trade shift, as Iran sells at near-parity prices compared with Brent crude. Previously, Iran sold at a $10 discount per barrel. General License U issued in March saw Iranian oil fetching a premium, which Erickson believes will continue under the new license due to competition increasing prices.
He adds that Iran could see a profit increase of roughly $5 per barrel. Erickson also accounts for reduced costs associated with Iran’s shadow fleet used for shipping and financial operations, estimating costs around $7 per barrel. The realization of increased revenues would be about $11 per barrel.
Iran’s current access to 180 million barrels, including offshore and onshore storage, offers the potential to ramp up production to 500,000 export-ready barrels daily. With a shipping journey averaging 17 days, Erickson calculates Iran can sell 201.5 million barrels if they maximize sales during the waiver period.
The Long-Term Impact
Erickson advises caution regarding future gains, suggesting revenues may decline post-waiver unless extended for a year. He estimates an upper limit of $10 billion if the waiver continues indefinitely.
Ben Cahill of the Atlantic Council Global Energy Center emphasizes the significance lies beyond the 60-day window as Iran’s ability to sell more outside China gradually unfolds. Deals and logistics mean immediate changes are unlikely, especially as the waiver could be altered depending on peace talks.
Should the license become lasting policy, Cahill estimates Iran could earn an additional $35 billion annually in oil revenue based on JCPOA period export averages, a $70 Brent price, and a $5 discount.