Oil Rises as Fresh US Sanctions Against Iran Jolt Crude Market

Oil prices surged on Monday as the United States imposed fresh sanctions on Iran's oil industry, targeting more than 30 people and oil tankers across multiple jurisdictions. The sanctions, which aim to disrupt Iran's oil exports and reduce its revenue, have significant implications for global crude oil supply and pricing, as well as geopolitical stability and energy security.

The U.S. Treasury and State Departments announced the sanctions, which include the heads of Iran's National Iranian Oil Co. and the Iranian Oil Terminals Co. The sanctioned ships move crude oil valued in the hundreds of millions of dollars, according to the Treasury. This is the second round of sanctions imposed on Iranian oil sales since President Donald Trump issued the National Security Presidential Memorandum 2, ordering a campaign of maximum pressure on Iran.



The sanctions come as Iran's oil exports have been declining, with shipments to China, which purchases nearly all of Iran's oil, decreasing by 25% since October 2024. Simultaneously, the loading of Iranian oil tankers continues, leaving approximately 20 million barrels of crude oil stranded at sea, primarily near the coasts of Malaysia and Singapore.

The U.S. Energy Information Administration estimates that Iran brought in $253 billion in oil revenues during both Joe Biden and Trump's presidencies, between 2018 to 2024. However, the Biden administration's recent actions, coupled with Trump's potential strategies, suggest a sustained effort to stifle the Iranian regime's financial lifelines through its oil trade.

The sanctions have the potential to exacerbate geopolitical tensions, disrupt global oil supplies, and impact regional stability. Iran has warned that it may retaliate if its oil exports are significantly reduced, potentially leading to an escalation of tensions in the region. As stated by an Iranian official, "If we are unable to export oil, we will prevent others from doing so" (The Economist, 2025).

Major oil-consuming countries like China and India are likely to face significant challenges in responding to the sanctions. China, the largest importer of Iranian oil, may try to circumvent the sanctions by using intermediaries, such as Malaysia, Oman, or the United Arab Emirates, to facilitate ship-to-ship transfers of Iranian oil. However, the U.S. has warned that it will target these intermediaries as well, making it increasingly difficult for China to maintain its Iranian oil imports.

India, the second-largest importer of Iranian oil, may choose to reduce its imports of Iranian oil to avoid U.S. penalties. However, it may also try to negotiate with the U.S. to secure a waiver from the sanctions, as it relies on Iranian oil to meet its energy needs.

In conclusion, the latest US sanctions on Iran's oil industry have significant implications for global crude oil supply and pricing, as well as geopolitical stability and energy security. The sanctions come as Iran's oil exports have been declining, and they aim to disrupt Iran's oil exports and reduce its revenue. However, the sanctions also have the potential to exacerbate geopolitical tensions, disrupt global oil supplies, and impact regional stability. Major oil-consuming countries like China and India are likely to face significant challenges in responding to the sanctions, and their actions will have a significant impact on the global oil market.