Treasury Secretary Scott Bessent unveiled a specific geographic dimension to the administration’s oil crisis response Thursday, revealing that Iranian crude oil originally heading toward China could be diverted to broader world markets through a temporary lifting of sanctions. Bessent said the diof approximately 140 million barrels of Iranian crude from Chinese to global buyers would help address oil prices above $100 per barrel since Iran’s Hormuz blockade began.
Iran’s Hormuz closure has been the central driver of the current global oil price crisis, removing between 10 and 14 million barrels of daily supply from world markets for close to two weeks. The fact that Iranian crude was heading specifically toward China before the crisis adds a geopolitical dimension to the supply picture, with the potential direpresenting a shift in the oil’s commercial and geopolitical destination.
Bessent said a targeted temporary waiver could divert the approximately 140 million barrels of Iranian crude from their Chinese destination to global markets more broadly. This diwould, he argued, serve the dual purpose of increasing global oil supply and reducing the volume of Iranian oil flowing to a strategic competitor of the United States.
The Treasury has previously managed comparable diversions, having issued a waiver for Russian crude that redirected approximately 130 million barrels from their intended buyers to global markets. An additional unilateral US Strategic Petroleum Reserve release beyond the G7’s 400 million barrel joint commitment is also being prepared, while the administration has firmly ruled out any financial market intervention.
Experts raised questions about the diplan’s various dimensions. Compliance specialists warned that regardless of where the oil ends up geographically, the revenues from Iranian crude sales would flow to Tehran, providing funds for military activities and proxy support. Geopolitical analysts noted that while diverting Iranian oil from China is a secondary benefit, it is unlikely to significantly alter the strategic balance between the US and China, which has multiple alternative supply arrangements.