Maze of War and Sanctions Distorts Trade

With oil prices in mind, the Trump administration has deployed a haphazard approach to sanctions on Russia and Iran.

· Zigzag sanctions policy on Russia: The Trump administration reversed course on Russian oil sanctions, first signaling an end to waivers, then granting a 30-day reprieve, before indicating the waiver may lapse on May 16.

· Oil prices shaping decisions: Treasury Secretary Scott Bessent said pressure from developing countries worried about oil shortages influenced the temporary continuation of Russian oil sales.

· Criticism over aiding Russia: Critics argue the waiver is helping finance Russia’s war effort, with estimates suggesting Moscow earns up to $200 million per day from continued oil revenues.

· Simultaneous pressure on Iran: Even while easing some Russia-related sanctions, Washington escalated action against Iran, sanctioning 40 shipping firms and vessels, targeting Hengli Petrochemical in China, and expanding “Operation Economic Fury.”

· Iran policy marked by reversals: The U.S. first granted a temporary exemption for Iranian oil sales to stabilize prices, then allowed it to expire and shifted to intensified economic coercion.

· Economic warfare replacing military escalation: Analysts say Washington is leaning more heavily on sanctions and financial pressure as direct military escalation becomes riskier and less politically viable.

· Strait of Hormuz complicates strategy: Iran’s disruption of the waterway and continued activity by parts of its shadow fleet have reduced the effectiveness of U.S. sanctions and maritime pressure.

· Global blockade faces limits: U.S. interdictions of Iranian-linked tankers show some enforcement impact, but experts warn blockades are slow, legally contested, and may have only marginal practical effect.

· Sanctions and war increasingly intertwined: Experts say the policy confusion reflects a broader reality that economic and military warfare are merging faster than governments have developed strategies to manage them.

· Broader message: The episode underscores how energy dependence, geopolitical retaliation, and market realities are constraining the once-dominant power of U.S. sanctions.

[ABS News Service/27.04.2026]

Treasury Secretary Scott Bessent declared in mid-April that the United States would not extend a waiver allowing the sale of Russian oil. Two days later, on a Friday evening, the Treasury Department quietly issued another 30-day reprieve.

Ukraine’s president, Volodymyr Zelensky, condemned the waiver, saying, ”Every dollar paid for Russian oil is money for the war.” Senate Democrats called the 180-degree reversal a “shameful” decision.

Then, on Friday, Mr. Bessent told The Associated Press that the United States did not plan to renew the waiver for sales of Russian oil another time. The current waiver ends on May 16.

The about-face on Russian oil sanctions underscored the haphazard state of U.S. statecraft as the Trump administration confronts the fallout from the war it and Israel started with Iran. While the United States could once use its financial might to cripple the economies of adversaries, countries such as Russia and Iran have been using their leverage in energy markets to fight back. That has forced the Treasury Department, which oversees the U.S. sanctions program, to improvise.

The Trump administration rolled out a blitz of sanctions on Friday, targeting 40 shipping firms and vessels that it identified as part of Iran’s so-called shadow fleet of oil tankers as it broadened its efforts to cripple the Iranian economy. The administration also imposed sanctions on an independent Chinese refinery, Hengli Petrochemical Refinery, which is one of Iran’s largest customers for crude oil and other petroleum products.

At a Senate hearing last week, Mr. Bessent said that the decision to extend the Russia license came after developing countries lobbied him to keep more Russian oil on the market while they were in Washington for the spring meetings of the International Monetary Fund and World Bank.

“It was my belief we would not do it,” Mr. Bessent said, but added that poor countries have been struggling with the global shortfall of oil.

The White House and Treasury Department had no comment on whether the decision to continue easing the Russia sanctions came directly from President Trump.

The sanctions relief has been filling Russia’s coffers with, by some estimates, as much as $200 million per day, undermining years of work by the U.S. and Western allies that aimed to make it harder for Moscow to pay for its war in Ukraine.

“You don’t have to read ‘The Art of War’ to know that helping your adversaries gain money while you’re at war is a terrible idea,” Senator Chris Coons, Democrat of Delaware, said while questioning Mr. Bessent at the hearing on Wednesday. “No country has profited more from this war than Russia,” Mr. Coons added, noting that the country’s revenues also help support Iran militarily.

The strategy toward Iran has been equally muddled. The United States last month granted a 30-day exemption allowing the sale of Iranian oil, arguing that it would help curb global oil prices while preventing the Iranians from profiting by blocking the Strait of Hormuz. But this month, the Trump administration changed course, letting the sanctions exemption expire and embarking on “Operation Economic Fury,” with new sanctions on Iran. The U.S. military also extended its blockade on vessels coming in and out of Iranian ports to the waters of the wider world.

Mr. Bessent has likened the initiative to a financial bombing campaign. Last week, he and Mr. Trump emphasized the economic pressures they are putting on Iran. They have argued that Iran will be unable to store any more oil in a matter of days and will be forced to shut its wells, leading to the wells’ possible eventual failure and driving economic collapse.

“It is a kind of whiplash in terms of policy,” said Jennifer Kavanagh, a senior fellow and director of military analysis at Defense Priorities, a foreign policy think tank in Washington. “This whole back and forth is evidence the Trump administration did not expect this to last this long.”

Previously, “the primary vector of pressure” was military action, and the expectation seemed to be that bombing would force Iran to capitulate, she said. But as fighting has dragged on, raising the stakes of the war, the notion of military escalation became less palatable and Mr. Trump had already “escalated rhetorically to the maximum,” with his threat to wipe out Iranian civilization before a cease-fire, she said, leading to the focus on economics.

Iran complicated the U.S. sanctions strategy by blocking the Strait of Hormuz, engaging in economic warfare by military means.

An analysis from Lloyd’s List, the shipping intelligence firm, noted that there are “signs of disruption to Iran’s shadow fleet operations” amid the global U.S. blockade, with some tankers turning, diverting or pausing since its imposition. But vessel-tracking information also showed other Iran-linked tankers were actively sailing.

On Thursday, the Pentagon said U.S. military forces stopped and boarded a second sanctioned tanker carrying oil from Iran in the Indian Ocean, following a similar interdiction on Tuesday.

“But blockades are not quick fixes,” Ms. Kavanagh said. She has argued that Iran can probably withstand the pressure because they work slowly.

The global blockade raises legal and operational questions because it has no geographical boundaries. And the United States can only seize so many ships, suggesting the practical impact could be “marginal,” she argued, while at the same time degrading the U.S. reputation as an upholder of the international order, since many countries view such seizures as piracy.

Edward Fishman, a fellow at the Council on Foreign Relations, said that the haphazard use of sanctions by the United States reflects how economic and military warfare are merging. “We don't have a playbook for this kind of economic warfare, which may help explain some of the fumbling by the United States,” Mr. Fishman said.