Oil prices dropped sharply on Tuesday following remarks by U.S. President Donald Trump indicating that China can continue purchasing oil from Iran. The statement signals a potential shift in Washington’s “maximum pressure” policy against Tehran, coming in the wake of a fragile ceasefire agreement between Israel and Iran. By midday, global benchmark Brent crude had fallen $4.06, or 5.68%, to $67.42 per barrel, while U.S. West Texas Intermediate crude dropped $3.88, or 5.66%, to $64.63 a barrel. This follows a 7% decline in oil prices on Monday, as markets began to anticipate reduced geopolitical risk in the Middle East.
Trump’s announcement came via his social media platform, Truth Social, where he stated, “China can now continue to purchase Oil from Iran. Hopefully, they will be purchasing plenty from the U.S., also. It was my Great Honor to make this happen!” The remarks contrast with earlier threats from May, when Trump warned that countries buying Iranian oil risked being cut off from the U.S. market. China is the primary importer of Iranian oil, accounting for the bulk of Iran’s exports, which average around 1.7 million barrels per day. Market analysts suggest Trump’s latest stance reflects a desire to stabilize oil prices rather than escalate tensions with Iran.
According to Kpler’s lead oil analyst Matt Smith, Trump has historically been reluctant to completely eliminate Iranian oil from global markets, concerned that doing so would further inflate prices. Oil markets had surged earlier this month after Israel launched airstrikes on Iran, targeting three key nuclear sites. The attacks raised fears of a broader conflict that could disrupt oil shipments from the region, particularly through the Strait of Hormuz, a critical maritime chokepoint through which about 20% of the world’s crude oil passes.
However, Tehran’s response to the strikes, a missile attack on a U.S. airbase in Qatar that resulted in no casualties, provided an opportunity to de-escalate. A ceasefire agreement between Israel and Iran was announced shortly afterward, though its stability remains uncertain. Early Tuesday, Trump accused both Tehran and Jerusalem of violating the terms of the ceasefire and issued stern warnings, particularly directed at Israel.
“I’m not happy with Israel,” Trump told reporters en route to a NATO summit in the Netherlands. “I’m not happy with Iran either, but I’m really unhappy if Israel continues its bombing campaign.” The ceasefire’s fragile status and Trump’s softened stance on Iranian oil exports have left investors cautiously optimistic that a wider conflict and subsequent oil supply disruptions can be avoided for now. Markets will continue to monitor developments closely, particularly regarding compliance with the ceasefire and movements in the Strait of Hormuz. – By MENA Newswire News Desk.