The return of Iranian crude to global markets following a temporary US sanctions waiver on Iranian oil sales could help offset supply losses elsewhere in the Gulf region and ease pressure on tight global oil markets, says industry experts. The move could bring additional crude supplies to the market at a time when the energy sector is recovering from disruptions caused by the prolonged conflict in West Asia.
Jim Burkhard, Vice President and Head of Research for Oil Markets, Energy and Mobility at S&P Global Commodity Insights, said the key difference is that Iranian oil would likely no longer trade at the steep discounts seen under sanctions. However, he cautioned that the extent of damage to Iran's production and export infrastructure remains a major uncertainty.
“Without sanctions-related restrictions, sellers would be able to capture higher prices. Iranian exports could partially compensate for lost production elsewhere in the Gulf region. The major uncertainty is the extent of damage to Iranian production and export infrastructure. If facilities can be restored quickly, production could return toward levels of 3–4 million barrels per day over time,” he added.
The development comes as peace talks between Iran and the US continue to make progress. The Office of Foreign Assets Control (OFAC) under the US Department of the Treasury has issued a 60-day general licence authorising the production, delivery and sale of Iranian crude and petroleum products. The waiver remains valid until August 21. Earlier, the US had also temporarily waived sanctions on seaborne Iranian oil sales for 30 days beginning March 20.
Prashant Vashisht, Senior Vice President and Co-Group Head, Corporate Sector Ratings at ICRA Ltd, said the reopening of the Strait of Hormuz and the issuance of the temporary licence are positive developments for the crude oil market, which has remained under supply pressure.
“Iranian crude was historically available with credit period of 60-90 days as against 30 days of other crude producers which was beneficial for refiners due to lower working capital requirements besides which geographical proximity to India would benefit Indian refiners,” said Vashisht.
Despite the potential benefits, analysts believe China is likely to gain more than other Asian importers, including India. India, which meets around 88% of its crude oil requirement through imports, has already secured most of its crude purchases through August 2026. Iran was once a major oil supplier to India, but imports were halted after US sanctions were imposed.
However, Indian refiners could still benefit indirectly. Increased availability of Iranian crude may force suppliers such as Russia and Saudi Arabia to offer deeper discounts or lower official selling prices to protect their market share in Asia.
During the more than 100-day-long West Asia conflict, which disrupted nearly one-fifth of global crude supplies, India diversified its sourcing by increasing imports from the US, Russia, Africa and Latin America.
According to reports citing Vortexa data, around 126 million barrels of Iranian crude are currently stored on tankers. Nearly half of these volumes are already positioned in Asia, floating in the South China Sea and the Yellow Sea, while the remainder is also expected to move toward Asian markets.
