President Donald Trump stunned Israeli officials on Tuesday by lifting key sanctions that had blocked Iran from finding international markets for its oil — a dramatic shift in U.S. policy that effectively greenlights a major economic lifeline for Tehran.
Trump announced the move in a social media post while flying to Europe on Air Force One, explaining that he had lifted restrictions on Iran trading with China, and adding that he hopes China will also purchase “plenty” of oil from the U.S.
“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!” Trump wrote.
Fox report: Oil prices continued to drop and markets surged Tuesday as Trump battered Iran and Israel into accepting a precarious ceasefire agreement. The agreement has curbed concerns that Iran would shut down the Strait of Hormuz, a key trade route for shipping oil across the globe.
Crude hit $65 per barrel in extended trading after West Texas Intermediate crude futures fell more than 8% to about $67 per barrel on Monday afternoon. Brent crude, the international benchmark, fell to $70 a barrel.
Washington reinstated sanctions on Tehran in 2018, and Trump’s administration has imposed several new rounds of sanctions on Iran’s oil trade since taking office in January.
Trump’s sanctions had included penalties on three Chinese oil import companies, which led to curtailed buying.
Last week, industry experts warned that Iran shutting down the Strait of Hormuz could cause prices to surge to as much as $120 a barrel.
Roughly 20% of the world’s oil supply travels through the strait, though closing it would significantly hurt Iran’s own revenue. Energy Secretary Chris Wright dismissed concerns about its closing on Tuesday, telling Fox News that the move would harm Iran more than it would anyone else.
“The United States today is a net oil exporter. We don’t count in any meaningful way on oil coming out of that strait. Iran would harm itself more than it would harm anyone else. It’ll probably cause a mess or trouble, but it’ll be small,” Wright said.