On Tuesday, the Trump administration revoked a waiver allowing Iranian oil sales, following an attack on three tankers in the Strait of Hormuz by the Islamic Revolutionary Guard Corps. The Treasury Department stated that General License X would be superseded by General License X1, which does not authorize new Iranian oil sales but allows existing transactions until July 17 to be processed with funds placed in a blocked account.
The U.S. had been required under a 60-day memorandum of understanding signed last month to issue sanctions waivers and allow Iran to export crude oil as part of an ongoing ceasefire between the two countries, which was violated by Iran’s actions on Tuesday. A U.S. official stated that the memorandum is performance-based, with benefits only available if Iran behaves well.
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, criticized the revocation, warning about consequences and stating Iran would take decisive action to protect its national interests and security. Oil prices rose following news of the sanctions waiver, with Brent Crude reaching $75 a barrel and West Texas Intermediate crude hitting $71.
A Saudi Arabian Embassy spokesperson condemned Iran’s attacks on commercial vessels, emphasizing that these actions threaten international navigation and global energy supplies. The U.S. military’s Central Command struck targets inside Iran in retaliation for the attacks on commercial ships, which it called a clear violation of the ceasefire.
The memorandum of understanding signed on June 18 halted fighting between the U.S. and Iran for 60 days while both sides worked on technical details over Iran’s nuclear program and required Iran to allow safe passage for commercial ships. The cessation of attacks and the waiver helped stabilize oil prices, which had peaked at $125 a barrel in late April due to the closure of the Strait of Hormuz and damage to Gulf oil and gas infrastructure.
China and India were major beneficiaries of the General License X sanctions waiver, according to Daniel Tannebaum, a former sanctions official. The impact on oil markets from the revocation remains unclear, but the broader implications for international navigation in the Strait of Hormuz are significant, requiring remarkable diplomatic efforts to restore conditions seen just five months ago.