US Treasury Secretary Scott Bessent has said that he extended sanctions relief on Russian and Iranian seaborne oil for 30 days because of requests from countries that are the most vulnerable to oil shortages from the closed Strait of Hormuz.
Bessent, testifying at a US Senate Appropriations subcommittee budget hearing on Wednesday, revealed that following the UAE‘s request for a currency swap line, other Gulf allies have also requested similar facilities.
Bessent said the decision to extend sanctions relief on Iranian oil came after the requests from finance leaders of about 10 countries during last week’s International Monetary Fund and World Bank meetings.
The action reversed his earlier comments last week that he would not renew expiring sanctions waivers.
Bessent faced sharp questioning about the administration’s decision to ease sanctions on Iranian and Russian oil.
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Senator Chris Coons expressed concern that Iran has gained $14 billion in revenue since the US-Israel war on Iran began in late February, while Russia earns an extra $150 million a day to fund its military efforts in Ukraine.
Bessent dismissed the $14 billion figure as a “myth,” asserting that he “couldn’t disagree more” with the premise that the relief was counterproductive. He argued that the move prevented a global price surge, noting that without the adjustment, oil prices could have spiked to $150.
“Just as you are concerned about gasoline prices for the American consumer and for our Asian allies, as are we,“ he said, adding that the policy ensured the world remained “well supplied” with 250 million barrels of oil.
He predicted US gasoline prices to drop below pre-war levels once the US conflict with Iran concludes.
“I can tell you that it is my belief that when we talk about gasoline, that the crude market is currently in what is known in the energy business is very steep backwardation,“ said Bessent, explaining that future prices currently sit much lower than present rates.
He predicted that as hostilities end, fuel costs will return to previous levels, “or perhaps lower.”