The Trump administration on Tuesday revoked a waiver that allowed Iranian oil sales, a key source of revenue for the regime, after the Islamic Revolutionary Guard Corps attacked three tankers in the Strait of Hormuz.
The Treasury Department said that “General License X,” which was issued two weeks ago as part of an interim peace deal between the U.S. and Iran and exempted Iranian oil sales from U.S. sanctions, would be superseded by a narrower waiver called “General License X1.”
The new license does not authorize any new Iranian oil sales after Tuesday. It allows a grace period until July 17 for transactions already in process and authorized under the previous license, with the money from those sales placed in a “blocked, interest-bearing account.” It is unclear how many transactions were already in process.
The U.S. had been required to issue sanctions waivers and allow Iran to export crude oil as part of a 60-day U.S.-Iran memorandum of understanding struck last month. That deal also extended a ceasefire between the two countries — a provision the U.S. accused Iran of violating Tuesday by attacking three commercial vessels.
“As President Trump and the administration have repeatedly affirmed, the MOU in effect with Iran is entirely performance-based,” a U.S. official told CBS News in a statement after the oil sanctions waiver was rescinded. “Iran will only reap benefits if they exhibit good behavior. Iran’s actions in the Strait were wholly unacceptable to the United States and will be met with consequences. Our negotiators continue to work in good faith towards a final deal.”
Iran’s Deputy Foreign Minister, Kazem Gharibabadi, blasted the U.S. revocation of the waiver, saying it violated the memorandum of understanding, in a post on X.
“Iran, while issuing a serious warning regarding the consequences of America’s breach of the agreement, will take decisive actions to safeguard its national interests and security,” Gharibabadi wrote.
Oil prices rose on the news. The international Brent Crude benchmark climbed to $75 a barrel. The U.S.-based West Texas Intermediate crude benchmark jumped to $71.
A spokesman for Saudi Arabia’s Embassy in the U.S. condemned Iran’s attacks on commercial vessels and said that Saudi and Qatari tankers were targeted.
“The Kingdom affirms that these unacceptable attacks are an assault on the security and safety of international navigation, and the energy of global energy supplies,” the spokesperson said.
The U.S. military’s Central Command said Tuesday it struck targets inside Iran in retaliation for the strikes on commercial vessels, which CENTCOM called a “clear violation of the ceasefire.”
The cessation of attacks on commercial ships and the U.S. waiver permitting Iranian oil sales were key components of the memorandum of understanding signed by the U.S. and Iran on June 18. The memorandum halted fighting between the U.S. and Iran for 60 days, while both sides worked to iron out technical details over Iran’s nuclear program, and required Iran to allow for the safe passage of commercial ships.
It also helped put a lid on oil prices, which peaked at $125 a barrel in late April because the Strait of Hormuz, where one fifth of the world’s oil transited before the war, was effectively closed. Iranian drone and missile strikes also severely damaged oil and gas infrastructure in Gulf countries, leading to supply shortages which pushed up prices.
Shortly before the memorandum was signed, commercial oil reserves were on track to hit critical levels. Gasoline prices, which peaked at over $4.50 a gallon in May, would likely have risen even further.
“Oil reserves run out in about 4 weeks,” President Trump said in a press conference on June 17.
China and India, among the top buyers of Iranian oil, “were the primary beneficiaries” of the “General License X” sanctions waiver, according to Daniel Tannebaum, a former sanctions official at the Federal Reserve and Treasury Department.
It is unclear what impact two weeks of Iranian oil sales — plus a surge in oil shipments through the Strait — will have on oil markets.
The broader impact of the U.S. withdrawal of “General License X” is yet to be seen, said Tannebaum, who is now a partner at Oliver Wyman, where he leads the Global Anti-Financial Crime practice.
“What we do know is the Strait of Hormuz is permanently changed at this point,” he said. “This war set off the conditions for Iran to do something that no one really believed they could do, and I don’t know how you get that genie back in the bottle. It will take a remarkable feat of diplomacy to really move back to the type of free navigation that we saw through the Strait just five months ago.”
