US issues temporary licence for Iranian oil sales during peace talks

WASHINGTON: The United States on Monday authorised limited Iranian oil sales, easing long-standing sanctions as Washington pursues a final peace arrangement with Tehran tied to commitments on nuclear inspections and shipping through the Strait of Hormuz.

The US Treasury Department announced a 60-day general licence valid through August 21. According to the licence, it permits the production, delivery and sale of crude oil, petrochemicals and petroleum products of Iranian origin. It also allows Iranian oil to be brought into the United States when needed to complete a sale, delivery or offloading.

US Treasury Secretary Scott Bessent said the move was connected to ongoing negotiations in Switzerland. In a post on X, he said Iran had agreed to keep transit through the Strait of Hormuz open and to allow inspectors from the International Atomic Energy Agency into the country.

"In line with the ongoing productive talks ​in Switzerland, Iran has committed to free and open transit in the Strait of Hormuz and to permit International ​Atomic Energy Agency (IAEA) inspectors into their country", Bessent added that the Treasury had issued a temporary 60-day licence as part of the framework under discussion.

"As part of the framework, Treasury has issued a temporary 60-day general license authorizing the production, delivery, and sale of Iranian oil", he added.

Terms of the arrangement

Under a memorandum of understanding signed last week between Washington and Tehran, the United States agreed to provide waivers covering exports of Iranian crude, petroleum products and derivatives, along with related services including banking transactions, insurance and transport. The licence also states that payments to Iran can be made in US dollar-denominated funds.

The authorisation does not apply to Cuba, North Korea or Crimea, which are specifically excluded under the licence.

The US has not made meaningful imports of Iranian oil since sanctions were first imposed after the 1979 revolution, when revolutionary students seized the US embassy in Tehran and held American diplomats hostage. Additional sanctions were later introduced over Iran’s nuclear programme and its backing for groups Washington classifies as terrorist organisations.

Market and diplomatic backdrop

Independent Chinese refiners have been the main purchasers of sanctioned Iranian oil, benefiting from steep discounts while many other buyers stayed away. Before US sanctions were reimposed in 2018, major importers of Iranian crude also included India, South Korea, Japan, Italy, Greece, Taiwan and Turkey.

Mediators said on Monday that Washington and Tehran had made encouraging progress in the first round of talks aimed at securing a final peace deal. The discussions were launched under the memorandum of understanding reached last week, which extended a fragile ceasefire from April for at least another 60 days.

Oil prices had surged after Tehran began blockading the Strait of Hormuz, triggering a US blockade of Iranian ports. Following the interim agreement, however, prices dropped to their lowest level since before the war began on February 28 with US-Israeli attacks on Iran.