Oil prices fell sharply Tuesday after President Donald Trump said China can keep buying oil from Iran, a sign that the U.S. is easing its maximum pressure campaign on the Islamic Republic in the wake of a ceasefire with Israel.
Global benchmark Brent fell $3.33, or 4.66%, to $68.15 per barrel by 10:18 a.m. ET. U.S. crude oil was last down $3.18, or 4.64%, to $65.33 a barrel. Prices closed 7% lower on Monday as the oil market bet that the conflict in the Middle East was winding down.
“China can now continue to purchase Oil from Iran,” Trump said in a post on his social media platform Truth Social. “Hopefully, they will be purchasing plenty from the U.S., also. It was my Great Honor to make this happen!”
Trump threatened in May to bar any country buying Iranian oil from doing business with the U.S. China purchases the vast majority of the 1.7 million barrels per day that Iran typically exports, according to data from Kpler.
Oil prices have tumbled to levels last seen before Israel started bombing Iran on June 13, as investors now believe the risk is low that a major supply disruption will occur the Middle East.
The U.S. decision to join Israel’s campaign and bomb three key nuclear sites in Iran over the weekend initially triggered fears that Tehran might try to choke off oil exports from the Persian Gulf in retaliation.
Instead, Tehran launched a missile attack on a U.S. airbase in Qatar that left no casualties, providing an offramp from further escalation. Trump announced a ceasefire agreement between Israel and Iran shortly afterward.
The ceasefire teetered on the brink of collapse early Tuesday as Trump accused both Iran and Israel of violating the agreement shortly after it went into effect. The president demanded that Jerusalem and Tehran adhere to the ceasefire, reserving unusually harsh words for 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 Tuesday.
Throughout the conflict, traders feared that Israel might target the 3.3 million bpd of crude oil that Iran produces, or that the Islamic Republic might lash out by targeting energy infrastructure in the Gulf nations, including Iraq.
Investors also watched if Iran would try to close the Strait of Hormuz linking the Persian Gulf and the Gulf of Oman. The strait, used to transport 20% of the world’s crude, is a key route for Iranian and other Middle Eastern shipments, including Saudi Arabia, the world’s largest oil exporter, the United Arab Emirates, Iraq, Kuwait and Bahrain.