US Treasury Secretary Scott Bessent announced Monday the issuance of a temporary 30-day license allowing access to Russian-origin oil cargoes stranded at sea, in response to mounting pressure on global crude markets amid the Strait of Hormuz crisis. Bessent stated the waiver, issued by the Office of Foreign Assets Control (OFAC), aims to stabilize supplies for 'the most vulnerable nations' heavily dependent on energy imports, while also reducing China's discounted oil stockpiling activities.
The announcement came two days after the administration allowed the previous Russian oil sanctions waiver to lapse. In a statement on social media platform X, Bessent noted the measure "will help reroute existing supply to countries most in need by reducing China's ability to stockpile discounted oil." Since March, as the Hormuz crisis intensified and millions of barrels of crude supply became disrupted or stranded, the administration has effectively implemented a rolling series of temporary authorizations.
The Treasury Department initially issued the sanctions relief in March through OFAC General License 133, later followed by General License 134 and 134B. These licenses authorize transactions necessary for the delivery and sale of Russian-origin crude oil and petroleum products already loaded onto vessels before specified cutoff dates. The authorizations cover transactions considered 'ordinarily incident and necessary' to complete these voyages, including shipping, insurance, bunkering, and port services. Importantly, the authorizations do not permit new Russian oil trade; instead, they apply narrowly to cargoes already afloat and are structured as temporary 'wind-down' measures.
Analysts have warned that prolonged closure of the Strait of Hormuz could tighten physical crude availability and further increase freight and insurance costs for developing economies heavily reliant on imported fuel. The repeated short-term extensions underscore the increasingly delicate balancing act facing Washington as the effective closure of the Strait of Hormuz continues disrupting global energy markets. As market participants await another extension before the waiver expires, they closely monitor the administration's pursuit of balance between energy security and sanctions policy.
Key Takeaways:
1. US Treasury Department issued a temporary 30-day OFAC General License for Russian oil cargoes stranded at sea due to the Hormuz crisis.
2. The waiver applies to cargoes loaded before sanctions deadlines; new Russian oil trade is not authorized.
3. Treasury Secretary Scott Bessent stated the waiver will reduce China's discounted oil stockpiling activities.
4. The rolling authorization series ongoing since March reflects Washington's balancing act between energy security and sanctions policy.
5. Analysts warn prolonged Hormuz closure could tighten physical crude supply and increase freight/insurance costs for developing economies.
