The United States has temporarily lifted sanctions on Iranian crude oil exports until August 21, a move that could pave the way for the return of Iranian barrels to global markets, including India, as Washington and Tehran advance negotiations linked to a broader peace framework and the reopening of the Strait of Hormuz.

In a general licence issued on Monday, the US Treasury department authorised “all transactions” previously prohibited under sanctions involving the production, sale, transport and delivery of Iranian-origin crude oil and related petroleum products through 12:01 am Eastern Daylight Time on August 21, 2026.

The sanctions relief forms part of a broader understanding reached between Washington and Tehran under which Iran has committed to ensuring free transit through the Strait of Hormuz and permitting inspections by the International Atomic Energy Agency (IAEA).

Treasury Secretary Scott Bessent said the move was linked to progress in negotiations between the two countries.

“In line with the ongoing productive talks in Switzerland, Iran has committed to free and open transit in the Strait of Hormuz and to permit International Atomic Energy Agency (IAEA) inspectors into their country,” Bessent said in a statement posted on X.

“As part of the framework, Treasury has issued a temporary 60-day general license authorizing the production, delivery and sale of Iranian oil,” he added.

Under a memorandum of understanding signed last week, the United States agreed to issue waivers covering exports of Iranian crude oil, petroleum products and derivatives, as well as associated services. The licence also permits Iranian oil to be imported into the United States when necessary to complete its sale, delivery or offloading.

The development could have implications for India, which was once among the largest buyers of Iranian crude before US sanctions halted purchases.

“Following the strikes on Russian refinery infrastructure, coupled with subdued crude import demand from China, more Russian barrels have become available for India. As a result, we are seeing the highest-ever Russian crude imports into India this month,” said Nikhil Dubey, Senior Refining Analyst, Kpler.

Dubey noted that future Russian crude flows could face additional compliance requirements after waivers linked to Russian barrels expired on May 17.

“On the Iranian energy flow front, one of the key points being discussed as part of a broader peace framework is potential sanctions relief on Iranian energy exports. If that happens, Iranian barrels could return to India relatively quickly. India had historically been a regular buyer of Iranian crude before sanctions were imposed, so there is no question around refinery compatibility or technical fit,” he said.

“The only real hurdle is sanctions compliance. Once sanctions are eased, we could see Iranian crude flows resume to India fairly quickly, especially given the existing trade history between the two countries,” Dubey added.

“Before sanctions, Iranian crude contributed more than 10% of India’s overall crude imports and could once again become a significant component of the country’s sourcing mix,” said Prashant Vasisht, Senior Vice President and Co-Group Head, Corporate Ratings, ICRA.

The temporary licence excludes transactions involving Cuba, North Korea and Crimea.

The decision also comes at a critical time for global energy markets, with the Strait of Hormuz accounting for a substantial share of global crude and LNG trade. Any sustained increase in Iranian exports could improve supply availability and help ease concerns over disruptions that have roiled energy markets since the outbreak of the West Asia conflict.