Treasury Issues Third 30-Day Russian Oil Waiver as Hormuz Disruption Persists

The Treasury Department's Office of Foreign Assets Control issued General License 134C on May 18, replacing General License 134B, which expired May 16. OFAC's new instrument authorizes transactions "ordinarily incident and necessary" to the delivery, sale, or offloading of Russian crude oil and petroleum products loaded onto vessels on or before April 17, with the authorization running through June 17, 2026. The license does not authorize transactions involving Iran, Cuba, North Korea, certain occupied Ukrainian territories, or entities owned or controlled by sanctioned parties in those jurisdictions. The legal authority underlying the waiver derives from the International Emergency Economic Powers Act, which grants the executive branch broad discretion to modify or suspend sanctions in response to declared national emergencies, as well as OFAC's general licensing authority under 31 C.F.R. Part 587.

Treasury Secretary Scott Bessent announced the extension via a post on X on Monday. Bessent said the U.S. will give a 30-day extension for countries to import Russian oil already in tankers at sea, a move intended to reduce the oil supply shortages caused by the Iran war. Bessent also said the extension would help "reroute" existing supply to countries that need it most by reducing China's ability to stockpile discounted Russian oil. The authorization extends to vessels blocked under existing Russia-related sanctions programs and includes services tied to vessel operations and cargo handling, including docking, anchoring, bunkering, insurance, classification, salvage, and emergency response.

The market context driving the decision is acute. Before the conflict began, roughly 20 million barrels of crude oil and other petroleum products transited the Strait of Hormuz daily, equivalent to approximately 20% of global crude trade, with as many as 180 vessels transiting the waterway each day. That traffic has dropped by as much as 97% since the end of February. As of May 18, international benchmarks surpassed $100 per barrel, with Brent Crude selling above $111 a barrel and West Texas Intermediate around $107 a barrel, compared with roughly $70 a barrel for both benchmarks at the end of February. The national average price of gasoline hit $4.515 a gallon on Monday, according to AAA.

The issuance of General License 134C is the third consecutive monthly authorization and marks an accelerating pattern of reversals. In March, shortly after the Iran conflict began, the Trump administration first issued a waiver allowing the purchase of seaborne Russian crude in an effort to stave off surging energy prices caused by the closure of the Strait of Hormuz. The temporary waiver was first renewed in April, just two days after Bessent said at the White House that he had no plans to extend the sanctions relief. Bessent confirmed the current 30-day general license just two days after the administration allowed its previous waiver to expire. In testimony before lawmakers in April, Bessent defended the rolling authorizations, stating that the waiver had allowed Treasury to put "more than 250 million barrels on the water" and ease supply fears.

The authorization has drawn pointed legal and political objections. A group of Democratic senators argued that the licensing action flies in the face of a requirement under the Countering America's Adversaries Through Sanctions Act, commonly known as CAATSA, to notify Congress 30 days before taking such an action, noting that the Senate overwhelmingly passed CAATSA and that President Trump signed it into law in 2017. Sen. Michael Bennet, a member of the Senate Select Committee on Intelligence, led 13 Senate colleagues in urging Bessent to fully resume sanctions on Russian oil and deploy every available tool to reduce Russia's wartime revenues. The 14 Democratic senators cited concerns in their letter about how the temporary measure could boost Russia's efforts in its ongoing war against Ukraine. Some European officials have also privately complained that relaxing restrictions undermines broader efforts to deprive Moscow of critical wartime income, particularly as higher global crude prices increase Russia's earnings potential. Senate estimates cited in the debate peg the increase to Russia's oil revenues at roughly $150 million per day.

The May 18 action fits within a wider energy-market response by the administration that has included loans from the Strategic Petroleum Reserve and a temporary waiver of Jones Act shipping restrictions. The decision highlights the increasingly difficult balancing act facing Washington and its allies as they seek to sustain pressure on Moscow over its war against Ukraine while also trying to prevent a wider energy shock. Speaking in Paris during a Group of Seven finance ministers' meeting, Bessent simultaneously called on allies to strengthen enforcement of sanctions on Tehran, urging G7 partners and other nations to follow the sanctions regime to "crack down on the illicit finance that is fueling the Iranian war machine." The dual posture, relaxing Russia-related energy sanctions while pressing for tighter Iran enforcement, is likely to face continued legislative scrutiny, particularly from members of the Senate Foreign Relations and Banking committees with jurisdiction over CAATSA compliance.