The United States has granted Iran a 60-day license to produce, sell, and transport oil and petrochemical products until August 21, as announced by the Treasury Department’s Office of Foreign Assets Control (OFAC) on Monday. This temporary reprieve comes amid ongoing negotiations for a permanent peace deal between the two nations, following productive talks in Switzerland. However, OFAC continues to block Iran from delivering crude to North Korea, Cuba, and parts of Ukraine invaded by Russia.

Key Terms and Commitments

In exchange for the license, Iran has committed to ensuring free and open transit in the Strait of Hormuz and permitting International Atomic Energy Agency (IAEA) inspectors into the country, as stated by US Treasury Secretary Scott Bessent. This move rolls back a series of OFAC oil-related sanctions imposed since President Donald Trump returned to office in January 2025. The license is part of a broader framework aimed at de-escalating tensions between the US and Iran.

Impact on Oil Markets

Oil prices continued to decline on Monday despite ongoing tensions, including negotiations over the Strait of Hormuz and fighting in Lebanon between Israel and Hezbollah. Front-month Brent futures dropped about 3% to $78 per barrel, while West Texas Intermediate (WTI) fell approximately 3.5% to nearly $74 per barrel. Prices had already plummeted last week after a preliminary 14-point peace agreement was signed on February 28, which seemingly reopened the critical Strait of Hormuz.

Ongoing Tensions and Threats

Despite the framework agreement, tensions have flared over continued hostilities between Israel and Lebanon, a key contention in US-Iran negotiations. Some Iranian sources reported that the Strait of Hormuz was closed again to shipping traffic on Saturday. President Trump threatened to upend the peace deal on Sunday via his Truth Social platform, demanding that Iran stop its "highly paid proxies in Lebanon from causing trouble" or face severe consequences. In contrast, US Vice President JD Vance, who was in Switzerland for the talks, claimed the Strait of Hormuz remained open and that Iranian officials had laid a "good foundation" for a final deal, according to Reuters.