Against all logic of a coherent foreign policy, the United States is currently easing sanctions on a country it is actively bombing. In March, the Treasury Department issued a general license allowing the sale of Iranian crude oil at sea, even as U.S. aircraft struck Iranian targets for a fourth consecutive week. The same month, Treasury’s Office of Foreign Assets Control removed Russian-linked individuals and entities from its sanctions list in several separate waves and issued a parallel general license for Russian crude already at sea. These are not routine adjustments. Rather, they betray a structural vulnerability in America's approach to economic coercion: energy shocks. And the Iran war has just triggered it.
Operation Epic Fury sent oil approaching $120 a barrel by prompting Iran to close the Strait of Hormuz. Gasoline prices followed. And gasoline prices are among the strongest predictors of presidential approval: not only when their pocketbook impact is large, but because they are one macroeconomic signal voters see every day. When the Strategic Petroleum Reserve failed to curb the spike, the administration reached for sanctions relief. Not just on Iran, but on Russia, whose escalated sanctions regime was reinforced over four years, by multiple administrations, for an entirely different strategic purpose. The diagnosis cuts deeper than any particular crisis: U.S. policy has a fundamental Achilles heel in energy prices — and energy is the transmission mechanism through which a crisis in one theater can compromise economic leverage in another.
The conventional observation is that Russia benefits from higher oil revenue. Bloomberg reported in March that Russia's Economy Ministry abandoned plans to downgrade its 2026 growth forecast precisely because the Iran war had boosted revenues. But the more complex point is not that Russia is benefiting. It is that the U.S. is being coerced, by its own price sensitivity, into dismantling tools it spent years constructing. The Russia sanctions were designed to constrain Moscow's ability to fund its war in Ukraine. They are now being unwound to manage a commodity shock that has nothing to do with Ukraine. If adversaries learn that any sufficiently large energy disruption can trigger sanctions relief, the entire architecture loses credibility as a coercive instrument.
This vulnerability is not unprecedented. The 1973 Arab oil embargo reshaped U.S. Middle East policy not through force, but through the demonstration that energy dependence could override strategic commitments. The Biden administration courted Venezuela and Saudi Arabia for supply after Russia's 2022 invasion of Ukraine, softening its posture toward both. Trump has now eased Venezuelan oil sanctions outright to manage Iran. Half a century after the embargo, the mechanism is the same. Only now, the United States is doing it to itself.
Russian leadership appears to understand this asymmetry well. "The Russians believe they can deal with chaos much better than Western companies who have shareholders and Western democracies who have voters," said James Henderson of the Oxford Institute for Energy Studies. "They believe they have a negotiating advantage because they don't have to deal with that." For all the damage sanctions have inflicted, the sustained downturn from the war has not stopped Russian forces from slogging westward. But in America, a similar shock is a countdown timer on strategic action. With Steve Witkoff's team negotiating both the Iran conflict and the Ukraine peace process, Moscow can afford to wait. It has signaled that it is in no rush.
Moscow is already exploiting the opening, promoting a reported economic normalization proposal centered on energy cooperation that reframes a Ukraine deal as a commercial negotiation, rather than a geopolitical settlement. Sanctions against a conquering authoritarian can be seen as a moral right. But sanctions that block mutual investments look like an obstacle to a deal. Despite the turn to this commercial logic, the business case does not hold. Upstream investment in Russia would require stability guarantees of ten to twenty years, assurances no one can credibly offer. After the capture of Maduro, Trump predicted oil majors would rush into Venezuela. They stayed on the sidelines. Russia presents the same problem at a larger scale.
The strategic return on these concessions is likely zero. "Trump is seen now in Moscow as unreliable," observed John Lough of Chatham House in an interview. "I think there is a very hard-edged Russian analysis of this situation, which is that Trump's in over his head and can't deliver." The existing institutional distrust between the two countries predates this administration; it will likely outlast Trump and Putin. The U.S., in other words, is burning its coercive leverage for a deal the other side already considers fantastical.
Sanctions were supposed to shape the strategic environment. Instead, the strategic environment is shaping which sanctions the United States is willing to maintain. That inversion is the trap, and the Kremlin is watching.
Astor Lu is a senior at Princeton University studying economics and Russian, and a research assistant at the Yale Jackson School of Global Affairs. His work focuses on energy markets, economic statecraft, and Russian foreign policy, with particular attention to how oil price shocks shape geopolitical leverage. His writing has appeared in Small Wars Journal and RealClearDefense.
