Oil prices continued to drop Tuesday, the day after the United States issued a 60-day license allowing Iran to sell oil on the global market for the first time since 2018. The Trump administration has also authorized Iran to sell that oil for dollars, a decision that upends decades of U.S. policy meant to squeeze Iran economically and prevent it from developing its nuclear program.

Under U.S. sanctions, Iran in recent years has used a “shadow fleet” to export oil. It’s also sold 1.4 million barrels, with almost 90% going to China and most at a discount to global prices due to the risk to buyers.

Now Iran can sell oil on the open market, receive higher prices and be paid in dollars. It could be an enormous economic boon for the country and provide billions of dollars to the regime. Iran is looking to sell that oil in Asia, but Bloomberg reported that many buyers are hesitating, whether it’s because they have found alternative sources, are worried about the reliability of Iranian oil (the license is only for 60 days) or fear the administration’s wild swings from one policy to another.

Recall that it was only two months ago that the U.S. increased sanctions on Iran’s financial institutions. “Iran’s shadow banking system serves as a critical financial lifeline for its armed forces, enabling activities that disrupt global trade and fuel violence across the Middle East,” Treasury Secretary Scott Bessent said in a statement at the time. “Illicit funds funneled through this network support the regime’s ongoing terrorist operations, posing a direct threat to U.S. personnel, regional allies, and the global economy.”

Now, as part of sanctions relief, Iranian banks can receive direct payment from foreign banks and financial institutions.

As The Wall Street Journal noted, “The waiver also exempts Iranian entities, including its central bank, from sanctions targeting terrorist activities, not just restrictions related to Iran’s nuclear work, said Miad Maleki, a former senior Treasury sanctions official who now works at the Foundation for Defense of Democracies, a think tank.”

President Donald Trump said Monday that Iran will use money from the oil sales as well as its previously frozen financial assets to buy U.S. agricultural products. “They’re supposed to use money to buy food for their people, because right now their people are very hungry, and they’re buying it exclusively from us: corn, soybeans,” he told CNBC. “So our farmers are very happy.” Iran has disputed this.

The license to sell oil is only for 60 days, but since negotiations will likely take longer than that, there’s a high probability it will be extended before it expires on Aug. 21. Then again, a big part of the memorandum of understanding signed by the U.S. and Iran explicitly states, “The United States of America undertakes to terminate all types of sanctions against the Islamic Republic of Iran … in an agreed upon schedule as part of the final deal.”

In the meantime, the administration is giving Iran one of the things it has desperately wanted for years, even before Iran ends its nuclear weapons program — one of the reasons the U.S. went to war. Vice President JD Vance said nuclear inspectors would return to Iran, though Iran has appeared to contradict that statement, and it’s unclear whether those inspections will actually happen. But such nuclear inspections were included in the agreement negotiated under the Obama administration, which Trump withdrew from during his first term.

One thing the waiver could do is keep the Strait of Hormuz, the key oil passage in the Persian Gulf, open to oil not only from Iran but also from other regional producers, which in turn could push oil and gas prices even lower in the weeks leading up to the midterm elections in November.

Gas prices have been steadily dropping since just before Memorial Day, falling for 33 days in a row. Yet while prices are down almost 64 cents from their recent high, they’re still up 22% from a year ago. Although gas prices usually come down more slowly than oil prices, there’s plenty of time — 133 days — until the November elections.

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