US to end Iran oil sanctions waiver; global supply concerns resurface

West Asia war: The United States has decided not to renew the 30-day waiver of sanctions on Iranian oil at sea, which is set to expire this week. This decision follows the quiet expiration of a similar waiver on Russian oil over the past weekend, according to two administration officials who spoke to Reuters. This move is part of the US' efforts to impose a blockade on shipments from Iranian ports.

The decision signals an intensification of what an official termed 'Economic Fury' on Iran, referencing the US-led military campaign against the country. The Trump administration has maintained a stance of applying 'maximum pressure' on Iran concerning its nuclear programme and support for militants across the Middle East. Despite these efforts, sanctioned oil has continued to find its way to China.

The waiver, issued by the Treasury Department on March 20, allowed approximately 140 million barrels of oil to reach global markets, alleviating pressure on energy supply during the conflict with Iran. Treasury Secretary Scott Bessent indicated that the waiver, which is set to expire on April 19, was not renewed for Russian oil at sea as well.

These actions mark a shift from the previous administration's controversial attempts to use sanctions waivers to increase oil supply and reduce global energy prices, which had surged since the onset of the US and Israeli conflict with Iran. US lawmakers from both sides criticised the administration, arguing that the waivers bolstered the economies of Iran and Russia during their respective conflicts with the US and Ukraine.

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Washington has a range of penalties it can apply to institutions involved in illicit activities with Iran, including secondary sanctions. With the reinstatement of UN sanctions on Iran, any engagement with Tehran could trigger additional penalties.

On Tuesday, the Treasury Department increased pressure on countries and administrations hosting banks that allegedly facilitated funds to Iran. Letters were sent to China, Hong Kong, the UAE, and Oman, identifying banks involved in Iranian illicit activities. This followed previous warnings to banks that Iran processed at least $9 billion through US correspondent accounts using front companies in various locations.

Bessent emphasised the need for swift action to halt any illicit activities linked to Iran to prevent further action from the Treasury. The embassies of China, Oman, and the UAE in Washington, as well as Hong Kong's economic and trade office, did not immediately respond to requests for comment.

Bessent also stated that the US blockade of the Strait of Hormuz would prevent Chinese and other ships from passing, thereby restricting access to Iranian oil. He noted that China had been purchasing more than 90 per cent of Iranian oil, which constituted about 8 per cent of their annual purchases.