WASHINGTON—On April 11, the general license allowing Russia to sell the oil loaded onto tankers as of March 12 is set to expire. Just over a week later, on April 19, a similar license for Iran will lapse as well. The Treasury Department issued these licenses to inject millions of barrels of Russian and Iranian oil into global markets while Iranian restrictions on the Strait of Hormuz curtailed Middle Eastern crude exports. By supplying much-needed oil to India and other Asian countries that have been facing acute energy shortages, this move was intended to meet global demand and ease upward pressure on crude prices.
But it isn’t working well enough. For three weeks after the Russia license was issued, oil prices continued to climb. Uncertainty surrounding the Iran war—even after the April 7 announcement of the two-week cease-fire—and fears of prolonged disruptions to Middle Eastern supply could keep prices high. Further, it would take several months to repair the damages in the Middle East and get oil production up to pre-war levels. So far, the temporary influx of Russian and Iranian oil has failed to offset these pressures. Meanwhile, US sanctions relief, combined with higher oil prices, is providing both regimes with a windfall of higher revenues while weakening US leverage over both adversaries. Russia is reportedly earning an extra $150 million in budget revenue per day. Similarly, Iran could be earning $139 million per day, according to Bloomberg estimates.
Given the uncertain outcome of talks to end the Iran war, and Iran’s position that the Strait of Hormuz can be opened only with its permission, the administration is likely to extend the licenses. There is a way, however, to mitigate the windfall to Iran and Russia, one that could ease upward pressure on global oil prices and limit revenues to these regimes: reimposing and enforcing the oil price cap on Russian oil and re-introducing the escrow account mechanism for Iranian oil.
Why a price cap on Russian oil makes sense in today’s global energy market
The price cap on Russian oil was introduced by the Group of Seven (G7) in 2022 to serve a dual purpose: reduce Russia’s oil revenues while ensuring its oil was still flowing to global markets. At that time, Russia’s invasion of Ukraine had caused major spikes in global crude oil prices, and ensuring that energy supplies remained steady was a priority. As supply conditions improved over time and OPEC countries increased production, prices began to ease. By 2025, the Treasury seized this more favorable environment to impose full blocking sanctions on major Russian energy companies. With Saudi Arabia and other OPEC producers boosting output, removing Russian barrels from the market was no longer as disruptive as it once would have been. Hence, the Treasury Department sanctioned Lukoil and Rosneft in October 2025. This constituted one of the most powerful measures taken against Russia’s energy sector, putting pressure on Russia to end its war against Ukraine just as Moscow’s battlefield fortunes were starting to shift in Ukraine’s direction.
However, as the United States intensified sanctions on Russian oil majors, it fell out of step with its G7 partners on enforcing the price cap on Russian oil, particularly in areas such as targeting shadow fleet tankers. It also did not follow European allies in lowering the cap to $47 and then $44, creating additional enforcement challenges. Worse, the Russia general license issued in March 2026 effectively superseded the price cap, easing both restrictions on Russian oil majors and the price cap itself.
Here is the curious part: There was no need to suspend the price cap on Russian crude. The cap would not have disrupted Russian supply flows. In fact, keeping the cap in place could have helped ease upward pressure on crude oil prices while continuing to constrain Russian revenues. Rather than relying solely on traditional supply-and-demand dynamics, the United States could have tempered oil inflation by maintaining a ceiling on what India and other Asian buyers pay for Russian crude. Given the state of its economy, Russia would have had to keep selling its oil.
On the demand side, China and India remain the primary importers of Russian oil. Several additional countries—including Vietnam, the Philippines, Sri Lanka, and Thailand—have either begun purchasing Russian crude or are considering doing so. All these countries have strong incentives to secure discounted supplies, which creates an opportunity for the United States to secure their tacit support in enforcement of the oil price cap.
It is time to reintroduce the escrow account mechanism for Iranian oil
Despite the issuance of limited waivers for Iranian oil, buyers have generally adopted a cautious approach. Iranian oil remains subject to statutory sanctions, the removal of which would require congressional action that might not automatically follow a US-Iranian deal to end the war. As a result, if the Trump administration’s use of temporary waivers were successfully challenged in court or allowed to lapse, purchasers could face renewed enforcement risk.
At the same time, there are reports that private refineries in India have shown interest in importing Iranian crude. Unlike Russian oil, which would likely attract a broader set of buyers in Asia if restrictions were eased, Iranian exports are expected to remain concentrated in China, with India potentially emerging as a secondary, but still limited, destination.
In this scenario, if the Iran general license is extended, the United States could consider implementing a restricted payment mechanism that permits Iran to continue limited oil exports while preventing access to hard currency. Such mechanisms—typically involving escrow accounts held in the importing country’s financial system—have been used in the past to channel Iran’s oil proceeds into controlled accounts that can only be used for buying humanitarian goods. These arrangements were designed by previous administrations to help importers gradually reduce reliance on Iranian oil while minimizing market disruptions.
Under this framework, countries importing Iranian oil—at the time, this included Japan and South Korea—would deposit payments into escrow accounts held within their own jurisdictions. Iran could then draw on these funds to purchase food and medicine. This arrangement allowed Iran to receive value for its exports while restricting access to hard currency.
If the administration concludes that extending the license is unavoidable, it should rely on this established escrow model and ensure that oil revenues do not benefit Iran’s Islamic Revolutionary Guard Corps. Such a restrictive license would help maintain US leverage over Iran, which is important given possible upcoming US-Iranian negotiations to end the war.
Moving forward
Iran and Russia have long exported oil to China using evasion tactics such as shadow fleets and alternative payment channels. The United States and some European allies have seized shadow fleet tankers moving Russian oil. More of that could push higher-priced crude out of the market in favor of lower-priced crude carried on legitimate tankers. Meanwhile, India has complied with US restrictions and has imported Russian oil below the price cap. The new general licenses could expand the client base for both countries, enabling more Asian buyers to openly import Russian oil and allowing India to increase purchases of Iranian crude.