US Revokes Iran Oil Sanctions Waiver After Tanker Attacks, Sending Crude Prices Higher

WASHINGTON — The U.S. Treasury Department on July 7 abruptly revoked a general license that permitted Iran to sell its crude oil and petroleum products on the global market. The decision, which unwinds a fragile two-week-old agreement, came just hours after a series of attacks on commercial tankers in the strategic Strait of Hormuz, sending an immediate shockwave through energy markets and escalating geopolitical tensions in the Gulf.

The reversal cancels a sanctions waiver, known as “General License X,” that was first issued on June 22, 2026. That license was a key component of a 60-day interim memorandum of understanding between Washington and Tehran aimed at de-escalating months of conflict. The agreement was intended to create a window for negotiations on a broader deal concerning Iran's nuclear program and sanctions relief, but the recent attacks were deemed a violation by the U.S.

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The catalyst for the policy reversal was a series of attacks on three commercial vessels transiting near the Strait of Hormuz, a critical chokepoint through which approximately one-fifth of the world's daily oil supply passes. According to reports, Tehran has been insisting that vessels use a northern shipping route that it controls, and has attacked ships using an alternative southern route protected by the U.S. Navy. A spokesperson for Saudi Arabia's U.S. embassy confirmed that Saudi and Qatari tankers were targeted, condemning the incidents as an “unacceptable” assault on the security of international navigation and global energy supplies.

Under the terms of the now-revoked license, Iran was permitted to export its crude oil and receive payments in U.S. dollars. The Treasury Department’s Office of Foreign Assets Control has stipulated that while no new Iranian oil sales are authorized after July 7, a wind-down period will be allowed until July 17 for transactions that were already in process. Any funds from these completed sales are to be placed in a “blocked, interest-bearing account,” according to the department.

The market reaction was swift and pronounced. Following the news, U.S. crude futures rose 2.8% to $70.44 a barrel before jumping above $72 in after-hours trading. The international benchmark, Brent Crude, climbed to $75 a barrel, while the U.S.-based West Texas Intermediate (WTI) benchmark rose to $71. The price surge reflects market anxiety over both the immediate removal of Iranian supply and the heightened risk of broader conflict disrupting a vital energy corridor.

While the sanctions waiver was in effect for only 15 days, it had provided significant relief to some of the world’s largest energy consumers. According to Daniel Tannebaum, a former Treasury sanctions official now at the consulting firm Oliver Wyman, China and India were the “primary beneficiaries” of the temporary allowance to purchase Iranian oil. It remains unclear what the full market impact of the brief resumption of sales will be. In response to the U.S. decision, an Iranian official issued a statement warning that the country would take “decisive actions to safeguard its national interests and security.”

The collapse of the interim deal casts significant uncertainty over the future of diplomatic relations between the U.S. and Iran. The memorandum of understanding was seen as a fragile but necessary step toward reducing hostilities and resuming talks. With its key economic provision now rescinded, the path forward for negotiations is unclear.

Market participants and foreign governments will now be closely watching the July 17 wind-down deadline and monitoring the Strait of Hormuz for any further escalation. The stability of global energy markets for the remainder of the year may well depend on whether the recent attacks prove to be an isolated incident or the beginning of a more sustained conflict in the region.