President Donald Trump’s war against Iran has set off an economic chain reaction so severe that the United States has been forced to abandon a core pillar of its foreign policy: the crippling of Russia’s war machine.
With global oil prices spiraling past $100 a barrel after Tehran choked the Strait of Hormuz, the White House quietly announced Thursday that it would lift sanctions on Russian crude stranded at sea, effectively handing the Kremlin an economic lifeline at the very moment European allies were vowing to tighten the screws.
The move, described by Treasury Secretary Scott Bessent as a “narrowly tailored” measure to ease energy shocks, allows countries to purchase Russian oil loaded on vessels as of March 12, with deliveries permitted through April 11.
Bessent estimated the waiver could free hundreds of millions of barrels for global markets, but he acknowledged Moscow would see some financial benefit — a concession that landed in Europe like a slap.
“Easing sanctions now, for whatever reason, would be wrong,” German Chancellor Friedrich Merz told reporters Friday, visibly irritated that six of seven G7 leaders had opposed the U.S. decision.
The lone holdout, Hungary’s Viktor Orbán, aligned himself with Washington, breaking the European consensus.
European Council President António Costa was blunt.
“Russia is the only beneficiary of the current situation,” Costa said, noting that Moscow’s coffers are already swelling from oil prices driven higher by a war it did not start.
The war in question, launched by Trump on Feb. 28 under the name “Operation Epic Fury,” was intended to punish Iran for its regional aggression.
Instead, it has upended global energy markets. Tehran responded not with missiles aimed at Israel or U.S. bases, but with drones and mines targeting the Strait of Hormuz, the 38-kilometer passage through which one-fifth of the world’s oil flows.
Within days, shipping through the strait had ground to a near halt. Export volumes of crude and refined products are now below 10% of pre-conflict levels, according to the International Energy Agency.
Producers across the Gulf have been forced to shut in or curtail output, and Brent crude — which traded in the $60 range before the war — has repeatedly punched through $100 a barrel.
The IEA’s 32 member countries responded this week with the largest emergency oil stock release in history: 400 million barrels from strategic reserves. But analysts say that amounts to little more than four days of global supply, and it has done nothing to dislodge prices from their perch.
“It’s a band-aid on a gaping wound,” said Fanny Petitbon of the environmental group 350.org. “Working people shouldn’t be paying the price while oil majors treat the war in the Middle East like a winning lottery ticket.”
The fossil fuel industry is indeed cashing in. With supply constrained and demand inelastic, profit margins are swelling. Climate advocates argue that the crisis exposes the folly of dependence on fuels that flow through geopolitical choke points, but for now, the only relief Washington can offer is to unwind its own sanctions.
The problem is that those sanctions were designed to do precisely what Russia is now benefiting from: deny Moscow revenue to fund its war in Ukraine.
Since the 2022 invasion, the U.S. and its allies have imposed a price cap on Russian oil, blacklisted shadow fleet vessels and barred transactions with Russian energy giants. The goal was to starve President Vladimir Putin’s war budget.
Now, with oil above $100, Russia is selling every barrel it can produce, sanctions or no sanctions. The U.S. waiver applies only to oil already at sea — about 130 million barrels, according to data tracker Kpler — but the signal it sends is unmistakable: Washington’s priorities have shifted.
“In one fell swoop we’ve undone a huge amount of pressure on Russia,” said Edward Fishman, a senior fellow at the Council on Foreign Relations and author of “Chokepoints: American Power in the Age of Economic Warfare.”
He noted that Russian oil prices have been rising since the Iran war began, and he worries the sanctions relief could be extended indefinitely. “I do worry that this is effectively the destruction of the oil sanctions on Russia.”
European officials share that fear. Ursula von der Leyen, president of the European Commission, called this week for enforcing the price cap and keeping restrictive measures in place.
“This is not the moment to relax sanctions on Russia,” von der Leyen said.
French President Emmanuel Macron echoed her after a G7 meeting, calling any backtracking unjustified.
But Washington is no longer listening. The same administration that doubled tariffs on India last summer for buying Russian oil is now handing out waivers to facilitate those very purchases. Senate Democrats assailed the reversal, calling it an attempt to mitigate a war of Trump’s own making.
“This war has resulted in huge spikes in gas prices for Americans, who are now paying more at the pump than at any point in either of President Trump’s two terms,” they said in a joint statement.
For Putin, the irony is rich. His invasion of Ukraine triggered the most sweeping sanctions in modern history, designed to cripple his economy and starve his war effort. Three years later, an American war on Iran has done what he could not: broken the sanctions coalition, lifted oil prices and handed him a financial windfall.
The Strait of Hormuz remains largely closed. The IEA’s emergency barrels are trickling out. And in Brussels, European leaders are left to wonder how a war launched to project American strength ended up handing Vladimir Putin the one thing they swore he would never get: an economic victory.