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President Trump’s peace deal with Iran offers waivers on U.S. sanctions on Iranian oil, one of multiple facets of the agreement that is angering Iran hawks, including some Trump allies.
Critics worry that relaxing the sanctions bolsters the economy of a nation hostile toward America and gives away key leverage in the push to get nuclear concessions from Tehran.
The 60-day ceasefire memorandum of understanding (MOU) says that the Treasury Department will immediately waive sanctions on “Iranian crude oil, petroleum products and derivatives, and all associated services.”
Iran has some of the largest proven oil reserves in the world, but sanctions currently limit how much it is able to export.
“The initial waiving of sanctions should mean that Iran can sell its oil to a lot more than just China, which has been substantially the only customer in recent years. But pre-sanctions, Iran was selling oil to lots of different countries,” said Clay Seigle, nonresident scholar in energy security at the Center for Strategic and International Studies.
Seigle said that China was previously able to get Iranian oil at a discounted rate, but now, Iran may be able to fetch a higher price for the commodity.
“If China would, in the future, be competing with other potential buyers, that might bid up prices, Iran stands to gain more per barrel,” he added.
Asked about the impact of lifting the sanctions, Gulf Oil chief oil analyst Tom Kloza said he thinks “Iran has done well” in the deal.
“The amount of money that’s going to be at their disposal to rebuild is pretty staggering,” he said.
Iran hawks argue that the U.S should not be throwing the adversarial country this financial lifeline.
“This is a considerable boon to not just Iran, but to the Iranian government, and in particular to the national security apparatus,” said Patrick Clawson, director of the Viterbi Program on Iran and U.S. Policy at the Washington Institute.
Clawson said he views that issue as the “only concession in this agreement for Iran.”
Other points in the memo, such as agreeing to unfreeze Iranian funds and assets, along with the $300 billion construction fund and terminating all others sanctions, are conditional based on “agreed-upon” terms and schedules and on how Iran performs.
Foundation for Defense of Democracies senior fellow Miad Maleki argued that the Trump administration is “trading away its most durable economic lever before the hard part of the negotiation has even started.”
“If broad relief is offered upfront while negotiations drag on for months, it normalizes Iranian oil flows to China, India, and the UAE, and critically, normalizes the repatriation of Iran’s oil revenue back to Tehran,” Maleki wrote on X. “Once that normalization sets in, re-establishing today’s level of leverage would take years, not weeks.”
The war’s critics, meanwhile, say the deal tips in Iran’s favor.
“There are consequences to losing wars,” said Amir Handjani, board member of the Quincy Institute, a think tank that promotes foreign policy restraint.
“The stated goals of the war were regime change, handing over your enriched uranium and no missiles and no drones. … That document doesn’t address missiles and drones, there’s been no regime change and what is Iran doing for that upfront sanctions relief? They’re opening up the Strait of Hormuz, which was open before the war,” Handjani said.
In a post on X, Sen. Bill Cassidy (R-La.) leveled a similar critique.
“Reagan is rolling over in his grave,” he wrote.
“Before the war, the strait was open, Iran was being crushed by sanctions, and 13 service members were still alive. Now, 13 Americans are dead, families have paid billions at the pump, sanctions will be lifted, and the bombing has stopped. This is the worst foreign policy blunder in decades,” Cassidy added.
Trump has defended the deal, saying the U.S. has leverage because “Iran now has to be good, they have to behave.”
He added that prior sanctions would “never let them rebuild. They would have no money.”
“They would be in poverty. Their 91 million people would starve. So, something will happen as soon as they behave. When they behave, we’re going to let that go,” Trump said.
And Vice President Vance told reporters Thursday that the administration doesn’t view waiving the oil sanctions as a major concession to the Iranians, and the Iranians don’t view it as one, either.
“What prevented them from selling oil was not the sanctions; they were selling plenty of oil without any discount, because the sanctions were just fundamentally ineffective at that point,” Vance said. “What the sanctions did do is move the Iranian financial system to sort of the shadow banking system.”
He painted the waived sanctions and lifting of the blockade on the strait as a “real benefit to the American people.”
“We’re actually going to be able to see a little bit where their financial system actually sends money and receives money,” Vance said.
He also pushed back on the claims that the money Iran collects from selling oil in the next 60-days could prop up its economy.
“The idea that selling a few million dollars’ worth of barrels, or a few million dollars’ worth of oil, is going to fundamentally transform the Iranian economy — that’s just not true,” he said. “We thought that it would be good in order to lift the blockade and open the Straits of Hormuz to allow the free flow of energy.”
Seigle said keeping sanctions lifted could incentivize Iran to play ball with the U.S. and keep the strait open.
“Iran has a huge incentive now to just take yes for an answer and reap all of the gains that the Trump administration is providing in this MOU,” he said.
Joel Rayburn, senior fellow in Hudson Institute’s Center for Peace and Security in the Middle East, said he didn’t view the waived sanctions as a major concession — yet.
“The Iranians are going to try to turn it into one by making it indefinite,” he said of the 60-day negotiation period. “They will try to turn it into open-ended sanctions relief without them having to deliver any of those broader issues in the MOU on their nuclear program, on the financing of terrorism and on dropping their interference in U.S. sovereignty.”
Rayburn said Trump will be tested by the Iranians and that he needs to stick to the 60-day negotiation period.
“The only way to scare them off of that, and to get them into real commitment, real implementation of the commitments under the MOU, is if they believe that he really means it, that he will return to military force, the blockade, or sanctions enforcement, if they don’t come to a quick, a timely agreement,” Rayburn said.
The vice president also echoed this point, saying, “We can slap everything right back on if the Iranians don’t make the deal that we expect.”
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