US Lifts Oil Sanctions on Iran for 60 Days in Interim Peace Deal
The United States has lifted restrictions on Iranian oil trade until August 21, a move that could provide Tehran with billions of dollars in relief as part of an interim peace agreement ending the Iran war. The sanctions relief is a central pillar of the peace framework signed last week by Washington and Tehran, according to reports from Dawn and Deutsche Welle.
The US Treasury issued a temporary general licence allowing the production, delivery, and sale of crude oil, petrochemical, and petroleum products of Iranian origin through August 21, as reported by Dawn. This 60-day reprieve is intended to give both sides time to negotiate a permanent deal, but experts caution that unwinding more than four decades of sanctions will not be quick or easy.
Sanctions Relief and Economic Impact
The interim deal also includes discussions between the US and Qatar about releasing around $6 billion (€5.3 billion) from frozen Iranian oil revenues. US President Donald Trump said the funds would be used for the purchase of food and medical supplies exclusively from the United States, including corn, wheat, and soybeans from American farmers. Tehran has denied any obligation to buy food from US farmers.
Iran's economy has been severely damaged by the recent war with the US and Israel. Preliminary estimates from the Iranian government put the cost of the conflict at around €229 billion in damages, according to Deutsche Welle. The Memorandum of Understanding between the two countries also mentions a $300 billion payout for reconstruction, though details remain unclear.
Iran's government has already been forced to borrow large amounts of money from the central bank to cover war expenses, according to Iran's Economy and Finance Minister Seyed Ali Madanizedah. He warned that the loan is expected to boost inflation in the coming months and noted that "an agreement with the US will not fully normalize the Iranian economy."
Challenges in Dismantling Sanctions
While the temporary licence marks a significant step, experts point to the complexity of fully removing sanctions. The sanctions regime includes measures imposed by the United Nations, the US, and the European Union since the late 1970s, covering Iran's nuclear programme, human rights violations, and support for militant groups. Removing them would require executive action for some measures, approval by Congress for others, and close coordination with international partners.
Juan Zarate, who served as deputy national security adviser for combating terrorism under former President George W. Bush, described the situation as a "tangled nest of sanctions," including congressional sanctions that cannot be undone by the executive branch alone. He added that companies, wary after decades of restrictions, may steer clear of working with Iran to avoid legal and reputational risk.
Economy expert Ahmad Alavi, speaking to Deutsche Welle, does not expect noticeable short-term improvements. He pointed to the now-defunct JCPOA deal from over a decade ago, which kept Iran's economy on "life support" through increased oil revenues and lower outside pressure, but without deep structural reforms, the underlying issues remain.
Outlook
The 60-day period will test whether the interim deal can deliver tangible economic benefits for Iran while addressing the concerns of US lawmakers and international partners. Congress remains skeptical, and the path to a final agreement is fraught with political and legal obstacles. For now, the temporary lifting of oil sanctions offers a glimmer of hope for Iran's struggling economy, but the road to full normalization appears long.