On June 17, US President Donald Trump and Iranian President Masoud Pezeshkian signed a memorandum of understanding (MOU) to end the Iran war.
Alongside a commitment to reach a broader peace agreement over the next sixty days, the MOU includes a provision that waives sanctions on Iranian oil sales and ancillary services—such as banking, transportation, and insurance—through General License X (GL X).
But what exactly does this sanctions waiver mean for Iran and the global energy market? We’ve crunched the numbers to give you our best estimate.
General License X won’t automatically bring Iranian oil back to global markets
GL X represents a meaningful easing of the “maximum pressure” sanctions campaign launched after the first Trump administration withdrew from the Joint Comprehensive Plan of Action (JCPOA) in May 2018. Yet despite years of sustained pressure, Iran kept oil flowing through its shadow fleet and other sanctions-evasion mechanisms, with China absorbing the majority of exports while benefiting from deep discounts.
It was only during the US naval blockade beginning in mid-April that Iran’s crude exports dropped significantly—and exports began recovering almost immediately after the blockade ended.
Still, even with GL X in place, it is unclear whether Iranian oil exports will return to their pre-war average. Between November 2025 and January 2026, Iranian crude oil exports averaged about 1.5 million barrels per day (bpd) according to data from Kpler. From February to April, that figure rose to about 1.8 million bpd. Yet in June, Iran is projected to export just over 720,000 bpd.
Given the damage to Iran’s energy infrastructure during the conflict and the continued disruptions in the Strait of Hormuz, including recent Iranian strikes on commercial ships, it is difficult to estimate how quickly exports will bounce back. Moreover, it remains unclear how GL X will affect global demand for Iranian crude—and therefore how much Tehran can ultimately gain from temporary sanctions relief.
Having been Iran’s biggest customer for years, China seems like the obvious destination for Iranian oil. But Beijing may have little appetite for significantly increasing its purchases. For one, China stockpiled crude throughout 2025, benefiting from discounted sanctioned oil, and total import levels have fallen markedly after the closure of the Strait of Hormuz. In addition, once Iranian oil can be sold legally, discounts are likely to narrow as prices move closer to prevailing market rates.
At the same time, China is not dependent on Iranian supplies. In fact, Iranian crude only accounted for approximately 14 percent of Beijing’s oil imports in 2025—and in May 2026, Iran’s share fell to just under 11 percent, while Russia, Saudi Arabia, and Brazil accounted for approximately 15, 16, and 18 percent, respectively, according to data from Kpler.
India, by contrast, may emerge as a more promising destination for Iranian crude. After months of supply disruptions and soaring energy prices, the country—already one of the largest global oil importers—is running dangerously low on fuel. India was a major buyer of Iranian crude between 2016 and 2018 under the JCPOA but phased out those imports in 2019 following the reimposition of US sanctions during the first Trump administration.
Though India imported over 4 million barrels of Iranian crude in April 2026 during a brief US sanctions waiver, it has reconfigured its import portfolio following the closure of the Strait of Hormuz. Increased purchases from Russia, Venezuela, and a growing number of unknown suppliers have largely offset the disruption. Yet the expiration of a US sanctions waiver for Russian crude on June 17 has made a return to Iranian oil increasingly attractive—particularly now that imports no longer carry the risk of secondary sanctions.
Years of sanctions have driven Iran’s oil trade into non-dollar channels
Even if demand from China and India increases, major questions remain about how Iranian oil exports will be financed and transported. Issuing a sanctions waiver that authorizes oil sales is one thing; persuading banks, shipping companies, and insurers to reengage with Iran within sixty days is another.
The Islamic Revolutionary Guard Corps, which remains deeply embedded in Iran’s oil trade, retains terrorism designations across multiple jurisdictions. Meanwhile, sanctions by the European Union and the United Kingdom remain in place, restricting access to European-based services such as SWIFT. Given the unpredictability of US-Iran relations, businesses also face the risk of snapback sanctions if peace talks collapse. For many banks and logistics providers, the risk-reward calculus will favor staying on the sidelines.
On payments, Treasury Secretary Scott Bessent’s statement that “Iranians will be invoicing in dollars”—also reflected in GL X—sets an important precedent. If implemented successfully, it could give the United States greater visibility into the trade of Iranian crude. However, making this shift requires enlisting major US banks, which may be reluctant to rush back into Iran, risking compliance violations and steep fines for any missteps, unless clear and defined guidelines establish a less risky path of return.
As a result, transactions will likely continue to flow—at least in part—through alternative payment systems. That would not be unprecedented. After the United States withdrew from the JCPOA in 2019 and reimposed sanctions, India settled Iranian oil purchases through barter arrangements and rupee payments under a six-month sanctions waiver. Similarly, under the waiver issued in March 2026, Indian refiners reportedly routed payments in yuan through ICICI Bank’s Shanghai branch.
These workarounds function, but they increase transaction costs and operational complexity, raising doubts about whether Iran can fully capitalize on the opportunities created by GL X.
The real test is whether the US can use sanctions relief constructively
The key question, therefore, is not whether Iran can export oil under GL X, but whether the waiver will meaningfully reshape global crude trade. A full recovery in Iranian exports remains uncertain, and even with sanctions relief, it is unclear whether buyers will return to conventional dollar-based settlement mechanisms.
India and China remain the most likely customers, but both have already demonstrated a willingness to route payments through alternative financial channels that operate outside the purview of the United States.
Against this backdrop, Washington should work to ensure increased visibility into Iranian oil transactions by reestablishing credible dollar-denominated transactions and payment systems with Iran. And for that, it will need to do more than suspend sanctions.
Treasury should pair GL X with clear compliance guidance, comfort letters, and fact sheets that reduce the legal uncertainty that is currently keeping US banks sidelined.
Ultimately, GL X is more than a temporary sanctions waiver. It is a test of whether the United States can use sanctions relief as a constructive policy tool—or whether it is unable to prevent the growing shift to alternative payment systems for oil trade.
Lize de Kruijf is an assistant director with the GeoEconomics Center’s Economic Statecraft Initiative.
Chloe O’Connor is a program assistant with the Global Energy Center.
About the authors
Staff
Lize de Kruijf
Program Assistant, Economic Statecraft Initiative
Economic Statecraft Initiative GeoEconomics Center
Dutch Economy & Business Staff
Chloe O’Connor
Program Assistant
Global Energy Center
Energy & Environment Geopolitics & Energy Security
stay connected
Sign up for PowerPlay, the Atlantic Council’s bimonthly newsletter keeping you up to date on all facets of the energy transition.
Related work
Oct 30, 2025
Energy Sanctions Dashboard
This dashboard focuses on US sanctions and restrictive measures placed on crude oil from Russia, Iran, and Venezuela—including the unintended consequences and the lessons learned.
Dispatches Apr 8, 2026
Sanctions waivers on Russian and Iranian oil are set to expire. Here’s what Trump should do next. By Maia Nikoladze, Daniel Fried
Washington should rely on already established mechanisms to limit revenue flows to both Tehran and Moscow.
Conflict Economy & Business
New Atlanticist Nov 25, 2025
How Venezuela uses crypto to sell oil—and what the US should do about it By Maia Nikoladze
As US sanctions on Venezuela have intensified, the Maduro regime has grown increasingly interested in leveraging digital assets to facilitate oil transactions.
China Digital Currencies
our work
The Global Energy Center develops and promotes pragmatic and nonpartisan policy solutions designed to advance global energy security, enhance economic opportunity, and accelerate pathways to net-zero emissions.
learn more
Housed within the GeoEconomics Center, the Economic Statecraft Initiative (ESI) publishes leading-edge research and analysis on sanctions and the use of economic power to achieve foreign policy objectives and protect national security interests.
Learn More
Dollar Dominance Energy & Environment Financial Sanctions and Economic Coercion Iran Oil and Gas Image: Aerial overhead view of two large crude oil tankers. Source: iStock.