The US Is De-Sanctioning the Adversaries It Went to War to Isolate

On March 3, Indonesia's energy minister made a straightforward call: with the Strait of Hormuz under threat from US-Iran hostilities, Jakarta would redirect its crude imports to the United States.

The current scenario is that for the crude that we import from the Middle East, we will redirect to the US, so that there’s certainty of availability for us. — Bahlil Lahadalia

Six weeks later, on April 14, Indonesia's president sat down with Vladimir Putin at the Kremlin and signed a strategic energy partnership — for Russian crude, Russian LPG, and Russian nuclear technology ^[1]. The US, which had supplied 75% of Indonesia's liquefied petroleum gas, could not fill a one-million-barrel-per-day deficit while simultaneously draining its own emergency reserves. The certainty Jakarta sought had already moved east. That reversal is not an anomaly. It is the mechanism the war has set in motion. The US bombing campaign against Iran has systematically disrupted the Strait of Hormuz, through which 20% of the world's oil passes ^[2]. Middle East oil exports collapsed between 61% and 71% in the largest supply disruption in history ^[3]. Each closure created a supply vacuum, and each vacuum forced Washington to fill it with the only tool that worked at scale: de-sanctioning the adversaries the bombing was meant to isolate. The sequence is documented in Treasury filings and the president's own words. On March 5, the US issued an India-specific waiver on Russian oil sanctions. On March 12, it widened to a general 30-day waiver. It was extended again through May 16, reversing Treasury Secretary Scott Bessent's April 15 statement that he would not renew ^[4][5]. Trump was blunter than his Treasury secretary.

So we have sanctions on some countries. We’re going to take those sanctions off until this straightens out. — Donald Trump

The result was immediate. Russian oil revenue hit $19 billion in March, nearly doubling from the February low of $9.75 billion, as crude export prices surged from under $40 per barrel to roughly $62 ^[6][7]. Zelenskyy put the cost plainly.

every dollar paid for Russian oil is money for the war. — Volodymyr Zelenskyy

He estimated the waiver handed Moscow roughly $10 billion to fund military strikes against Ukrainian cities ^[5]. And then there is what Russia was doing with the money. While the US Treasury was waiving sanctions, Moscow was sharing satellite intelligence on over 50 Israeli civilian energy facilities to facilitate Iranian strikes ^[8]. Iran's foreign minister confirmed military cooperation and intelligence sharing with Russia and China, while US Ambassador Witkoff reported that Russian officials told Trump they were not sharing intelligence — a direct contradiction ^[9]. The US was de-sanctioning Russian oil while Russia was actively aiding Iran's targeting and lying to Washington about it. The waiver expired on June 17, after a US-Iran memorandum of understanding briefly restored Hormuz flows ^[10]. Trump explained the logic.

We took sanctions off because obviously we’re not looking to impede the oil. — Donald Trump

Senator Warren saw the extension for what it was.

Extending this license yet again would give Vladimir Putin another opportunity to reap windfall financial gains while he continues his brutal war against Ukraine. — Elizabeth Warren

But the expiration did not end the pattern. It simply shifted its target. With the Russian waiver gone and Hormuz traffic briefly restored, the US signed a 14-point MOU with Iran and issued a 60-day general license allowing Iran itself to produce and sell crude oil through August 21 ^[11]. The same Iranian oil infrastructure the US had spent months bombing was now licensed for sale — because reopening the strait required de-sanctioning the country whose ports and refineries had been targets. Bessent later conceded the license was largely ineffective.

No one other than China, who was already buying it when it was sanctioned, has bought it, so it's still trading at a discount to China, and the Iranians thus far have not been able to sell their oil because the buyers are a little weary of will it be re-sanctioned, will I get in trouble with the Treasury — Scott Bessent

Buyers feared future re-sanctioning. The concession cost leverage and delivered almost no supply ^[12]. Meanwhile, the crisis was redrawing Asia's energy map — not temporarily, but structurally. The Philippines' energy secretary framed it as permanent.

The Department of Energy sees this current problem as not only a problem for today or next week or next month. It will be a prolonged problem. — U.S. Department of Energy Solar Energy Technologies Office

Manila sought a US waiver to import Russian crude after 4 million barrels of shipments were cancelled and diesel prices doubled ^[13]. Pakistan began planning a pipeline from Central Asia and Russia. Its ambassador explained the reasoning.

We produce about 10% of the energy resources we need ourselves, while the rest is imported, mainly from the Persian Gulf countries. A serious crisis has arisen, and that is why we began to look for alternatives. — Faisal Niaz Tirmizi

Vietnam signed a nuclear power agreement with Russia in March 2026, as the IEA's Southeast Asia Energy Outlook documented the region's 60% dependence on Middle Eastern crude and the structural vulnerability the war had exposed ^[14]. India, already receiving increased Russian crude and LNG offers via Vladivostok and Ust-Luga, was negotiating five additional S-400 air defense systems and targeting $100 billion in bilateral trade by 2030 ^[15]. Asian crude imports fell to a 10-year low of 20.4 million barrels per day — a 22% annual decline — as 12 million barrels per day were blocked from the region's markets ^[16]. Each country made the same calculation independently: the Middle East supply route was no longer reliable, the US could not fill the gap, and Russia was offering terms. The US, meanwhile, was burning through its finite buffer. Since strikes began, Washington released 172 million barrels from the Strategic Petroleum Reserve, bringing it to a 40-year low of 349.2 million barrels; Patrick De Haan of GasBuddy warned that if Hormuz remained closed through mid-summer, SPR releases could run out and gas prices could hit new record highs ^[17]. On July 3, a US-Iran MOU briefly reopened the strait. Brent stabilized around $72, and OPEC raised output by 3.3 million barrels per day ^[18]. Energy expert Fereidun Fesharaki was blunt about what the MOU meant.

There will be more conflict, there will be more trouble, this is not the end of the story. This is the beginning of the story. — Fereidun Fesharaki

By July 17, Hormuz traffic had collapsed to 1.27% of pre-conflict averages. Three commodity vessels transited. LNG and VLCC traffic were absent for two consecutive days ^[19]. The SPR was at a 40-year low, the Russian waiver had expired, the Iran license had been shunned, and Asian buyers had already begun rerouting their energy dependence toward Moscow. The US was entering the next turn of the crisis with fewer tools than the last.