Rising Oil Prices: Top Reasons the US Unlocked Russian Oil

The U.S. Treasury Department has issued General License No. 134, temporarily lifting sanctions on Russian oil stored at sea. This decision, effective until April 11, authorizes the sale, delivery, and unloading of Russian oil and petroleum products that were already loaded onto vessels before March 12, 2026. The measure specifically applies to oil already in transit and does not permit new production or exports.

Hormuz Crisis Triggers Tactical Shift

The move comes in response to the escalating crisis in the Middle East, where Iran closed the Strait of Hormuz, a critical waterway for global oil supply, following U.S. and Israeli strikes. This action caused oil prices to surge above $100 per barrel, sparking fears of a significant supply shock. According to Treasury Secretary Scott Bessent, the license is a narrowly targeted, short-term measure unlikely to generate substantial new revenue for Russia, as Moscow's energy income primarily stems from production taxes.

Shipping analytics indicate that over 120 million barrels of Russian oil were in transit across approximately 30 tankers at the time of the decision. This volume is equivalent to about five to six days of global oil consumption, potentially easing immediate supply pressures without necessitating new production.

Moscow Views Move as Recognition

The Kremlin interpreted the U.S. decision as a favorable development, with Kirill Dmitriev, Russia's special representative for investment and economic cooperation, stating it acknowledges the necessity of Russian supply for global oil market stability. He suggested that further easing of restrictions on Russian energy exports might become inevitable, despite opposition from some European nations.

Divisions Emerge Within G7

The U.S. decision highlighted divisions within the Western coalition. German Chancellor Friedrich Merz stated that six of the seven G7 leaders opposed easing sanctions on Russian energy and were only informed of the U.S. decision after it was made. Merz argued that the primary issue in global oil markets is price volatility, not physical supply shortages. The United Kingdom echoed a similar, albeit more cautious, stance, emphasizing its commitment to maintaining maximum economic pressure on Moscow.

Concerns Over Potential Oil Shock Persist

Despite the temporary measure, uncertainty remains about its effectiveness in stabilizing markets. Analysts warn that the combination of the Hormuz blockade, shipping threats, and declining global reserves could drive oil prices significantly higher. JPMorgan analysts projected a potential global supply deficit of 16 million barrels per day if the conflict escalates, suggesting the 120 million barrels currently at sea offer only a short-term buffer. The OFAC license addresses a logistical bottleneck but not the fundamental issue of the Strait of Hormuz closure. This decision sets a precedent, demonstrating the U.S.'s willingness to adjust sanctions on Russian energy when global energy stability is threatened.