The United States has decided not to extend a short-term relief it had quietly granted on Iranian oil, further tightening the squeeze on Tehran as tensions run high. According to Reuters, the waiver, issued by the US Treasury last month, will now expire this weekend. With that, Washington is making it clear that it is going all in on its pressure campaign against Iran, even as a naval blockade is now in place in the Strait of Hormuz.
US lets Iran oil waiver lapse as pressure mounts
30-day waiver, rolled out on March 20, allowed Iranian oil that was already loaded onto ships to be delivered and sold. It was never meant to be long-term, more like a temporary breather to steady global oil markets during a volatile phase.
That window shuts at midnight on April 19. Reuters, citing US officials, confirmed that it will not be renewed. A similar waiver for Russian oil was also allowed to quietly lapse over the weekend. The US is stepping away from easing supply concerns and is instead tightening sanctions fully.
Why was the waiver given in the first place?
When the waiver was introduced, the situation was already tense. The ongoing conflict involving Iran had disrupted oil flows across the region, especially around the Strait of Hormuz. Prices had shot up sharply, at one point rising more than 50% after the conflict began. To prevent a bigger shock, the administration had tried to balance things, keep pressure on Iran, but allow some oil to keep flowing so markets didn’t spiral.
The waiver helped around 140 million barrels of oil already at sea reach buyers, mostly in Asia, giving the market some breathing room.
Treasury Secretary Scott Bessent had earlier said this helped ease pressure on energy supplies during the ongoing conflict involving Iran. However, that balancing act did not last long.
What changes once the waiver ends
The waiver had allowed some Iranian crude already loaded onto ships to reach buyers without triggering penalties. That protection now looks set to disappear. For countries that rely on such supplies, especially in Asia, this creates a new problem. Buyers like China and India could face renewed pressure, with the risk of penalties not just for companies, but also for banks handling payments.
The US has made it clear that it can go after anyone involved, even outside its borders, through what are known as secondary sanctions. Alongside the expiring waiver, the US has already put a naval blockade in place around Iranian ports. Some estimates suggest up to 2 million barrels a day could be pushed out of the global market if flows are fully choked.
India, which had resumed limited imports during this period, and China, one of the biggest buyers, could be forced to look elsewhere. That usually means higher costs, both for refiners and eventually for consumers.
Oil markets have already been under pressure. Since the conflict involving Iran began, prices have jumped more than 50%. The waiver had offered some relief by allowing roughly 140 million barrels to reach the market.
Talks stalled, pressure increased
Diplomatic efforts, including talks held in Pakistan, failed to produce any breakthrough. With negotiations going nowhere, President Donald Trump moved to ramp things up. On April 13, the US enforced a naval blockade targeting Iranian ports and ships moving through the Strait of Hormuz.
In the first 24 hours, US Central Command said no vessel managed to get past, and at least six merchant ships were turned back. The operation involves over 10,000 US personnel, along with warships and aircraft. While the US says it is targeting Iranian traffic, it also insists that normal movement linked to other countries will continue. Iran, however, has warned of retaliation, including possible attacks or disruptions in the already sensitive waterway.
Pressure from both sides in Washington
Interestingly, the decision also comes after criticism from both Democrats and Republicans.
Lawmakers had argued that these waivers were effectively helping Iran’s economy at a time when the US was in direct conflict with it. The same concern was raised about Russia, given its war in Ukraine.
Officials say the US still has several tools it can use to go after those dealing with Iranian oil. These include secondary sanctions, penalties on companies or banks that do business with Iran, even if they are not based in the US.
US flags banks in China, UAE and beyond
Meanwhile, according to Reuters, the US Treasury has sent letters to countries and regions, including China, Hong Kong, the UAE and Oman, pointing out banks that it believes have helped move funds linked to Iran.
These letters follow earlier findings that Iran moved at least $9 billion through US-linked banking channels in 2024, often using front companies based in places like Hong Kong and the UAE.
In the letter, Bessent urged action, saying, “My hope is for your swift action to identify and stop any illicit activity linked to Iran to avoid further action from Treasury.” So far, officials from these countries have not publicly responded.