US lets Russian oil sanctions waiver expire amid Iran deal

The US allowed its waiver of Russian oil sanctions to expire on June 17 after US President Donald Trump suggested the US agreement with Iran to end the war and open the Strait of Hormuz would allow for more pressure on Moscow.

Trump said June 16 that the US would "soon" be able to increase sanctions on Russia. "We'll be able to do that because the oil is now flowing," Trump said on the sidelines of the G7 summit in France.

The leaders of the G7 group of countries also pledged to ratchet up sanctions on Russia's war economy, including on oil and gas sectors.

Russia exported an average of 6 million b/d of crude in May, up from 5.6 million b/d in April, 5.5 million b/d in March and 4.9 million b/d in February, according to S&P Global Commodities at Sea data.

After the start of the Iran war, the US Treasury Department issued three 30-day sanctions waivers for Russian oil on water and each time, Treasury let the license lapse for days before renewal.

The first license was issued on March 12 and expired on April 11. The second was issued April 17 and expired on May 16. And the last waiver was issued May 18 and expired June 17.

For the latter two sanctions waivers, US Treasury Secretary Scott Bessent said the licenses were needed to ensure oil reaches the most energy vulnerable nations.

Democratic lawmakers have criticized the Trump administration for issuing the waivers.

On June 16, Senator Jeanne Shaheen, Democrat-New Hampshire, the ranking member of the Senate Foreign Relations Committee, and Senator Elizabeth Warren, Democrat-Massachusetts, urged the Trump administration not to extend the waiver.

"Extending this license yet again would give Vladimir Putin another opportunity to reap windfall financial gains while he continues his brutal war against Ukraine," the senators said in a statement.

The oil sanctions waivers were always intended as a temporary tool to ease market pressures, said Olga Khakova, a nonresident senior fellow at the Atlantic Council's Global Energy Center.

But in just a few months, Russia earned more than $2 billion in additional revenue as a result of higher energy prices and the licenses, Khakova said. "These windfall profits financed an unprecedented scale of drone and missile attacks on Ukraine in the spring."

Even if the waiver is not extended, Russia is likely to use sanctions evasion tactics and continue redirecting its oil exports to Asian buyers at a significant discount to maintain some revenue flow and export volumes, Khakova said.