Trump Says China Can Buy Iranian Oil, but Urges it to Purchase US Crude
US President Donald Trump said on Tuesday that China can continue to purchase Iranian oil after Israel and Iran agreed to a ceasefire, a move that the White House clarified did not indicate a relaxation of US sanctions.
"China can now continue to purchase Oil from Iran. Hopefully, they will be purchasing plenty from the US, also," Trump said in a post on Truth Social, just days after he ordered US bombings of three Iranian nuclear sites.
Trump was drawing attention to no attempts by Iran so far to close the Strait of Hormuz to oil tankers, as a closure would have been hard for China, the world's top importer of Iranian oil, a senior White House official told Reuters.
"The president continues to call on China and all countries to import our state-of-the-art oil rather than import Iranian oil in violation of US sanctions," the official said.
After the ceasefire announcement, Trump's comments on China were another bearish signal for oil prices, which fell nearly 6% on Tuesday.
Any relaxation of sanctions enforcement on Iran would mark a US policy shift after Trump said in February he was re-imposing maximum pressure on Iran, aiming to drive its oil exports to zero, over its nuclear program and funding of militants across the Middle East.
Trump imposed waves of Iran-related sanctions on several of China's independent "teapot" refineries and port terminal operators for purchases of Iranian oil.
"President Trump's greenlight for China to keep buying Iranian oil reflects a return to lax enforcement standards," said Scott Modell, a former CIA officer, now CEO of Rapidan Energy Group.
In addition to not enforcing sanctions, Trump could suspend or waive sanctions imposed by executive order or under authorities a president is granted in laws passed by Congress.
Trump will likely not waive sanctions ahead of coming rounds of US-Iran nuclear talks, Modell said. The measures provide leverage given Tehran's demand that any deal includes lifting them permanently.
Jeremy Paner, a partner at law firm Hughes Hubbard & Reed, said if Trump chooses to suspend Iran oil-related sanctions, it would require lots of work between agencies.
The US Treasury would need to issue licenses, and the State Department would have to issue waivers, which require Congressional notification.
Oil traders and analysts in Asia said they did not expect Trump's comments to have a near-term impact on Chinese purchases of oil from either Iran or the US.
Iranian oil accounts for roughly 13.6% of China's oil purchases this year, with the discounted barrels providing a lifeline to margin-squeezed independent refineries. US oil accounts for just 2% of China's imports, and Beijing's 10% tariffs on US oil deter further purchases.
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