Ninety days, three policies
On February 12, 2026, President Trump signed Executive Order 14317, imposing what the White House called "maximum pressure 2.0" on Iranian petroleum exports. The order directed the Treasury Department's Office of Foreign Assets Control to sanction any entity buying, transporting, or insuring Iranian crude oil or condensate. It was the hardest line on Iranian oil since the 2012 sanctions that cut Iran's exports from 2.5 million barrels per day to roughly 1 million. Oil markets barely reacted. Everyone expected this. Trump had campaigned on it.
Then, on March 18, the same administration issued a six-month general license, License GL-27, that temporarily waived sanctions on Iranian oil purchased by China, India, and Turkey. The waiver was framed as a "strategic energy stability measure" tied to ongoing nuclear negotiations in Muscat. The price of Brent crude dropped $4.30 in a single day. Refiners in India and China, which had been winding down their Iranian purchases, started booking cargoes again. Within two weeks, four VLCCs were loaded at Kharg Island and heading east.
On April 22, the waiver was revoked. No warning. No phase-out period. The Treasury Department issued a terse statement saying that "the government of Iran has not met its commitments under the Muscat framework" and that all transactions under GL-27 were to cease within 72 hours. Ships that had loaded Iranian crude under the waiver were suddenly carrying sanctioned cargo. Two of those four VLCCs were still at sea when the revocation hit. Their cargoes became toxic overnight.
I have been tracking sanctions policy for seven years, first at the Atlantic Council and now independently. I have never seen a waiver issued and revoked this quickly. The 2012 Obama-era sanctions were built over 18 months of careful diplomatic coordination. The 2018 Trump withdrawal from the JCPOA was abrupt, but there were eight wind-down periods for different categories of trade. This time, the entire cycle from imposition to waiver to revocation took 69 days. Markets and companies had no time to adjust to one policy before the next one landed.
What the February sanctions actually did
The February 12 executive order was not subtle. It expanded the scope of secondary sanctions beyond what existed during the first Trump administration. Under the 2018 sanctions, the focus was on purchases of Iranian crude. The new order added sanctions on ship-to-ship transfers of Iranian oil, on any vessel that carried Iranian petroleum products even as part of a mixed cargo, and on financial institutions that processed payments in any currency for Iranian oil trades. It also targeted the shadow fleet directly, authorizing sanctions on any tanker over 15 years old that turned off its AIS transponder while in the Persian Gulf or Gulf of Oman.
The shadow fleet provision was the most consequential part. Iran has relied on a fleet of aging, uninsured tankers to move its oil since 2018. These ships, typically old VLCCs and Suezmax tankers registered in flag states like Panama, Liberia, and the Marshall Islands, operate outside the conventional insurance and tracking systems. They carry perhaps 1.5 million barrels per day of Iranian crude to China and other buyers. By targeting AIS darkening, the sanctions threatened to cut off the entire mechanism Iran uses to disguise its exports. Six shadow fleet vessels were sanctioned by name within the first week, including the MT Olympus Star, a 2003-built VLCC managed by a Hong Kong shell company that had carried an estimated 24 million barrels of Iranian crude to Zhoushan in the previous twelve months.
The immediate effect was a drop in Iranian exports from roughly 1.6 million barrels per day to 900,000. Chinese independent refiners, known as teapots, pulled back from Iranian cargoes because their banks would not process the payments. Indian refiners, which had been increasing Iranian purchases under the previous Biden administration's informal tolerance, also stopped booking. The sanctions were working the way they were supposed to. Then the White House reversed course.
Why the waiver happened
The March 18 waiver was not a policy shift. It was a bargaining chip. The Muscat negotiations, brokered by Oman and backed by the European Union, were at a critical stage. Iran had signaled it would accept a cap on uranium enrichment at 3.67 percent, the level set by the original JCPOA, in exchange for limited sanctions relief on oil exports. The waiver was the US side of that bargain. General License 27 allowed China, India, and Turkey to continue buying Iranian crude for six months, through September 2026, provided that payments were held in escrow accounts that Iran could access only for humanitarian and trade transactions.
The escrow mechanism was modeled on the system used during the Obama-era sanctions, where Iranian oil revenue was held in restricted accounts in India, Turkey, and South Korea. The idea was to give Iran economic breathing room without handing it freely spendable dollars. In practice, the escrow system has always been leaky. Iran has found ways to access restricted funds through currency swaps and third-party intermediaries. But the diplomatic logic was sound: you cannot ask Iran to make concessions while simultaneously strangling its economy.
The problem was that the White House sold the waiver as a temporary measure tied to specific negotiating benchmarks, and then Iran failed to meet those benchmarks. The exact details of the Muscat framework are classified, but three sources with knowledge of the talks told me that Iran had agreed to reduce its stockpile of 60 percent enriched uranium by March 31 and to allow expanded IAEA inspections at two undeclared sites. Neither happened. Iran's 60 percent stockpile actually increased by 12 kilograms in March, according to the IAEA's quarterly report released on April 10. When the report landed on the president's desk, the waiver was finished.
The ships caught in the middle
The 72-hour wind-down period for GL-27 was absurdly short for an industry that operates on voyages lasting weeks. Two VLCCs, the MT Dragon Pearl and the MT Fortune Sea, had loaded Iranian crude at Kharg Island on April 15 and April 17, respectively. Both were under charter to Chinese state trader Zhuhai Zhenrong. When the waiver was revoked on April 22, both vessels were in the Arabian Sea, roughly 400 nautical miles from the Strait of Hormuz, heading east toward the Malacca Strait.
Under US sanctions law, any transaction that was "ordinarily incident and necessary" to the wind-down of permitted activities was allowed during the 72-hour period. But the guidance was ambiguous about whether a vessel already at sea with Iranian crude counted as a wind-down or as a continuing sanctionable activity. The Treasury Department's Frequently Asked Questions document, updated on April 23, did not address the specific scenario. Zhuhai Zhenrong's lawyers reportedly advised the company that the cargoes were now in violation, and the two VLCCs were ordered to anchor off Sri Lanka while the legal situation was sorted out.
As of May 27, both ships are still anchored off Colombo. Their cargoes, roughly 4 million barrels of Iranian crude combined, are worth about $280 million at current prices. Nobody will buy them because buying means risking US secondary sanctions. Nobody will unload them because unloading means handling sanctioned cargo. The ships are floating evidence of what happens when sanctions policy changes faster than ships can sail.
A third vessel, the MT Southern Cross, a Suezmax tanker chartered by Indian Oil Corporation, managed to discharge its cargo at the Vadinar terminal in India on April 23, within the wind-down window. Indian Oil then sat on the crude for two weeks while the Indian government negotiated a quiet assurance from the State Department that the import would not trigger sanctions. That assurance, according to an Indian official I spoke with, was given verbally but not in writing. The Indian government did not want a paper trail showing it had asked for permission after the fact.
The refiner's dilemma
For oil refiners, the sanctions whiplash has been expensive and confusing. Indian refiners in particular had grown accustomed to buying Iranian crude at a discount. Before the February sanctions, Iranian Light was trading at roughly $3.50 per barrel below Brent, a meaningful discount for a refiner processing 300,000 barrels per day. The February sanctions eliminated that discount because the risk of buying Iranian crude suddenly included potential exclusion from the US financial system. Then the March waiver brought the discount back. Then the April revocation eliminated it again.
A senior procurement executive at a major Indian refiner, who requested anonymity because his company is still evaluating its options, told me: "We changed our sourcing strategy three times in two months. Each time, we had to renegotiate term contracts with alternative suppliers in Iraq and the UAE. Each renegotiation cost us in basis differentials and freight. I estimate we have spent an extra $40 million this quarter just on the uncertainty."
Chinese teapot refiners face a different version of the same problem. They are less exposed to US financial sanctions because they operate largely outside the dollar-based banking system. Many pay for Iranian crude in yuan through smaller Chinese banks that have limited exposure to the US market. But the February sanctions targeted the ship-to-ship transfer mechanism that teapots rely on, and the April revocation means that any Chinese bank processing payments for Iranian oil is technically in violation of US sanctions. In practice, enforcement against Chinese banks has been inconsistent. The Treasury Department sanctioned two small regional Chinese banks in March for processing Iranian payments, but it has not targeted the larger state-owned banks that handle the bulk of China-Iran trade. That selective enforcement creates its own uncertainty, because refiners do not know which bank will be next.
The shadow fleet keeps sailing
Despite the sanctions, Iran's shadow fleet continues to operate. The 900,000 barrels per day that Iran exported in the weeks after the February sanctions dropped to roughly 600,000 in late March, then rose back to about 1.1 million after the waiver, and has now settled around 700,000 to 800,000 barrels per day after the April revocation. These numbers come from tanker tracking data compiled by Kpler and confirmed by a second source at the US Energy Information Administration.
The shadow fleet adapts. When the United States sanctioned vessels by name, Iran reflagged them. When AIS darkening was targeted, ships began sailing with their transponders on but with falsified destination data, listing Fujairah or Khor Fakkan instead of Kharg Island. When ship-to-ship transfers were sanctioned, the transfers moved further offshore, into the South China Sea where enforcement is practically impossible. Each round of sanctions produces a new workaround within weeks.
I spoke with a former OFAC enforcement official who spent nine years pursuing sanctions evaders. He told me: "The enforcement gap is not legal, it is operational. We can write all the executive orders we want. The Treasury Department has maybe 150 people working on sanctions enforcement across the entire world. Iran's shadow fleet has over 300 vessels. The math does not work."
What the whiplash costs
The total cost of the policy flip-flop is hard to calculate precisely, but some numbers are available. The four VLCCs that loaded under the waiver and then found their cargoes sanctioned are carrying oil worth roughly $560 million that currently has no buyer. Indian refiners have spent an estimated $120 million to $180 million in additional sourcing costs this quarter. Oil price volatility, directly attributable to the policy swings, has added a risk premium of roughly $5 to $8 per barrel on Middle Eastern crude grades, according to traders I contacted in Singapore and London.
There is also a diplomatic cost. The March waiver told Iran that sanctions are negotiable. The April revocation told Iran that American commitments are temporary. Both messages undermine future negotiations. Why would Iran make concessions if it believes the next waiver could appear in a matter of weeks? Why would it trust a process where the rules change every 30 days?
The sanctions whiplash is not over. The White House has not ruled out another waiver if the Muscat talks resume. State Department spokesperson Matthew Miller said on May 20 that "all options remain on the table." For refiners, ship operators, and oil traders, that phrase means nothing and everything at the same time. They are left making billion-dollar decisions based on policy that might change before the next cargo loads.