Bessent Allows Iranian Oil to Flow Through Hormuz, Signals Possible SPR Release to Crush Oil Prices
A Dramatic Policy Reversal
On March 19, 2026, U.S. Treasury Secretary Scott Bessent made a stunning announcement:
"We will use Iranian oil to push down oil prices."
The U.S. has:
- Allowed Iranian oil to continue flowing through the Strait of Hormuz
- Signaled it may lift sanctions on ~130 million barrels of Iranian crude currently stranded at sea within days
- Indicated the U.S. may release Strategic Petroleum Reserve (SPR) to further suppress prices
Bessent stated explicitly that Iran's crude is now being treated as a tool to reduce oil prices β a remarkable admission given that Iran remains under extensive U.S. sanctions.
The Market Reaction
Oil prices continued to retreat on the announcement:
- Brent crude: gains narrowed to +4% (from +7% earlier)
- The market interpreted Bessent's comments as a signal that the U.S. is actively working to prevent a sustained oil price spike
Wall Street Revises Conflict Timeline β Now 5 Months
While Bessent's comments provided short-term relief, the strategic picture has darkened significantly.
From Weeks to Months
TS Lombard's Christopher Granville extended his base case for the conflict from 4-5 weeks to 5 months, comparable to the 2022 Russia-Ukraine energy shock:
"Trump's strategy of achieving an early exit is at risk of failing."
UBS Oil Price Warning
UBS strategist Bhanu Baweja warned:
"If the conflict doesn't end by April, oil could hit $150/bbl."
He noted that the S&P 500's elevated 22x P/E ratio makes equities particularly vulnerable to an energy shock.
Cascade Effects Beyond Oil
The crisis is already spreading well beyond crude:
| Commodity | Impact | Extreme Forecast |
|---|---|---|
| Aluminum | Middle East = 9% of global supply; Qatalum smelter shut | $5,000/ton |
| Sulfur | Export disruption threatens African copper production in 2-3 months | β |
| Urea/Fertilizer | Gas-dependent production hit in India and Europe | Corn at $7/bushel |
| Wheat | Fertilizer shortage cascading to agriculture | Full-year price increase |
Bank of America maintains a 12-month gold target of $6,000/oz, arguing that sustained high inflation combined with economic stagnation would force the Fed to cut rates even amid rising prices β a powerful tailwind for gold.
The Strategic Calculus
Bessent's policy reversal reveals the Trump administration's bind:
- Israel struck Iranian energy infrastructure (South Pars gas field) with U.S. coordination
- Iran retaliated by striking Gulf-wide energy facilities and declaring Hormuz targets
- Oil spiked to $110+, threatening global economic stability
- Trump now says he "had no idea" about the strike on Iranian facilities
- Bessent is releasing pressure valves β allowing Iranian oil flow, threatening SPR release
The sequence suggests internal divisions: the initial strike (reportedly supported by Trump) created a crisis that now requires emergency de-escalation.
Saudi Arabia's Alternative Route
One positive development: Saudi Arabia has successfully rerouted significant volumes via pipeline to its western port of Yanbu, averaging 4.19 million barrels/day over the past five days β restoring more than half of pre-war normal levels.
What to Watch
- Whether sanctions are actually lifted on the 130M barrels at sea
- SPR release timing and volume
- Iran's response to the U.S. allowing its oil to flow
- April deadline β if conflict continues past April, expect major market dislocation
Sources: WallstreetCN | WallstreetCN β Conflict Timeline