Trump Administration Provides Billions in Unrestricted Oil Sanctions Relief to Iran

The Trump administration is laying the groundwork for a major cash infusion for the Iranian regime.

On June 22, the Treasury Department issued General License (GL) X, a 60-day authorization for the production, sale, delivery, and offloading of Iranian-origin crude oil, petrochemicals, and petroleum products. The license follows a memorandum of understanding in which the United States committed to roll back sanctions based on steps Iran takes to reopen the Strait of Hormuz and negotiate over its nuclear program.

GL X will benefit Iran’s Islamic Revolutionary Guard Corps (IRGC), which controls much of the sectors covered by the license. Its sweeping authorization, including payments in U.S. dollars, appears designed to facilitate sales to international buyers. Yet the IRGC remains a U.S.-designated Foreign Terrorist Organization, meaning dealings with it may still create criminal material-support exposure that an Office of Foreign Assets Control (OFAC) license cannot eliminate.

Unconditioned Sanctions Relief Benefits IRGC Rearmament

Iran’s state budget allocates one-third of oil revenues — roughly $12.4 billion — to its armed forces and the IRGC. Less than a month before issuing GL X, Treasury warned that “Iran’s military oil sales … enabl[e] the regime’s ability to fund the rebuilding of its armed forces and pose continued threats to the United States and its partners in the region.”

GL X gives Iran the ability to fund its rearmament without any oversight by the United States. This is because the license contains no escrow mechanism; no restrictions on Iran’s use of the proceeds; no cap on the volume or value of authorized sales; no approved list of buyers or participating banks; and no transaction-specific reporting requirement that would provide Treasury or Congress with insight into the purchasers, vessels, insurers, intermediaries, payment routes, or financial institutions involved in what will almost certainly be billions of dollars in generally licensed oil sales.

Second Only to Iran, China Benefits From Sanctions Relief

Although GL X only technically applies to U.S. persons, its effect will likely extend abroad. Subject to program-specific considerations, Treasury generally does not sanction foreign parties for conduct authorized for U.S. persons. Chinese refiners, shippers, insurers, and banks will therefore likely treat GL X as a practical 60-day safe harbor for transactions that could otherwise trigger mandatory sanctions.

Chinese “teapot” refineries already purchase roughly 90 percent of Iran’s oil exports. These refineries increased their intake after Treasury authorized the sale of Iranian oil already at sea earlier in the war. GL X will similarly encourage Chinese buyers to expand those purchases and deepen supply, shipping, and payment networks that may endure after the license expires. Coupled with a lax enforcement posture by OFAC, GL X may also provide the functional equivalent of statutory waivers without requiring the administration to invoke waiver authorities that carry congressional reporting or notification requirements.

Additional Waivers, Sanctions Relief May Follow

The immediate question is whether GL X is the first in a series of future concessions before Iran takes verifiable steps on its nuclear program and support for terrorism. Also pertinent is whether it permits Iran to repatriate proceeds from previously unauthorized oil sales. Treasury should urgently clarify both issues.

Congress should also insist that the administration provide detailed information regarding any active or contemplated sanctions relief pursuant to the Iran Nuclear Agreement Review Act, which requires the president to notify Congress of the details of any negotiations involving Iran’s nuclear program.

Lastly, companies should not mistake temporary relief for the dismantlement of the broader sanctions architecture prohibiting dealings with Iran. Several congressionally mandated sanctions cannot be permanently terminated unless the president certifies that Iran has ceased supporting terrorism and verifiably dismantled its nuclear, biological, chemical, and ballistic missile programs. Iran’s missile program is not part of the current negotiations, and Tehran continues to support terrorism. Neither of these conditions is likely to change if the Iranian regime remains in power.

Max Meizlish is a research fellow for the Center on Economic and Financial Power (CEFP) at the Foundation for Defense of Democracies (FDD). For more analysis from Max, please subscribe HERE. Follow FDD on X @FDD and @FDD_CEFP. Follow Max on X @maxmeizlish. FDD is a Washington, DC-based, nonpartisan research institute focusing on national security and foreign policy.