Trump Shocks with Sudden Change on China Buying Iranian Oil

On Tuesday, President Donald Trump appeared to reevaluate years of US sanctions on Iran by permitting China, the nation’s largest oil buyer, to continue its purchases as he seeks to bolster a ceasefire with Israel.

This announcement on social media caught both oil traders and officials within his administration off guard and could undermine the core of US policy toward Iran. This policy has been pursued by multiple administrations with the goal of cutting off the regime’s primary revenue source by banning its leading export.

“China can now keep buying oil from Iran,” Trump proclaimed on Truth Social, amidst a series of posts urging both Israel and Iran to halt hostilities.

This statement came just hours after Trump revealed that the warring factions had reached an agreement for a ceasefire, despite initial violations from both sides. This was following significant US airstrikes on various Iranian nuclear sites on Sunday, aimed at preventing Tehran from acquiring nuclear armaments.

Following Trump’s comments, oil prices continued to decline on Tuesday, with West Texas Intermediate futures falling 6% to settle around $64 a barrel as worries about crude flow disruptions due to the Israel-Iran conflict subsided.

Officials from the US Treasury and State Departments, responsible for enforcing sanctions on Iranian oil, were taken aback by Trump’s announcement and were unclear on how to interpret it immediately, according to informed sources.

Nevertheless, Treasury aims to continue strict enforcement of the current sanctions, as stated by a source who requested anonymity due to the sensitive nature of the matter.

The Treasury Department did not issue an immediate statement, while the State Department redirected inquiries to the White House.

A senior White House official later asserted that sanctions would be upheld, indicating that the president continues to encourage China and others to prioritize American oil imports over Iranian, which may constitute a breach of US sanctions.

The official elaborated that Trump’s statement was intended to highlight that his recent actions had ensured the Strait of Hormuz remained unaffected, which he claimed would have serious consequences for China.

Tammy Bruce, a spokesperson for the State Department, declined to elaborate during a Tuesday briefing. “I’m not going to preempt the president or speculate on his strategy,” she said regarding Trump’s statement. “Things can change rapidly, and I believe we will find out in due course.”

This apparent shift aligns with efforts from the Trump administration to create a new trade framework with China, moving away from a tariff conflict that escalated duties to levels that nearly halted all trade between the world’s two largest economies.

Analysts interpreted Trump’s comments as “throwing a bone” to China and Iran for their cooperation in ongoing discussions with the US, according to Mark Malek, chief investment officer at Siebert. “Most of us perceive it as rhetoric for now, but it genuinely took me by surprise.”

Granting a specific exemption for China may be Trump’s strategy to send favorable signals to Beijing while negotiating a new tariff agreement, as indicated by a source familiar with the president’s perspective who preferred to remain anonymous.

While this potential adjustment could reduce some legal risks related to China’s procurement of Iranian oil, the actual impact on commodity flows remains uncertain.

China, recognized as the largest global importer, sources approximately 14% of its crude from Iran. This figure may be higher, as certain shipments are disguised as originating from Malaysia, the UAE, and Oman to evade US sanctions, which Beijing does not acknowledge.

Although China has not officially acquired Iranian oil since June 2022, data from third-party providers and traders show that oil flows have persisted despite extensive US sanctions, as China has established its supply chains independently of Western oversight, utilizing dark fleet shipping and yuan-based payments to support imports exceeding 1 million barrels daily.

Iran’s oil, usually purchased at a discount, is vital for China’s substantial private refining sector and serves as a critical fuel source for its economy, which is struggling amidst a declining property market.

“The sanctions against Iranian oil have been significant for a long time, although enforcement has been relatively lax,” stated Daniel Tannebaum, a former Treasury official and partner at Oliver Wyman. “It would be premature to expect this policy — potentially beneficial for both China and Iran — to move forward without a long-term strategy aimed at ensuring regional stability before fully opening the market for legal trade of Iranian oil by China.”

As recently as last month, Trump insisted that all purchases of Iranian oil or petrochemical products “must stop, NOW!” warning that buyers would face secondary sanctions and restrictions on business with the US.

This warning was consistent with previous alerts from his administration. In February, Treasury Secretary Scott Bessent announced that Washington aimed to reduce Iran’s oil exports to less than 10% of current levels while renewing their “maximum pressure” campaign initiated during Trump’s first term.

As part of these efforts, the US has sanctioned numerous oil tankers involved in transporting Tehran’s petroleum, and without any reduction of these measures, some buyers may remain hesitant.

The White House has also targeted Chinese entities that purchased Iranian oil, which may dissuade other buyers. Additionally, secondary sanctions on Iran’s oil sales remain enforced, leaving uncertainties surrounding the implications of the president’s remarks.

The sanctions aim to compel Iran to cease uranium enrichment voluntarily to prevent it from obtaining nuclear weapon capabilities.

The extent of the impact of US airstrikes over the weekend on Iran’s nuclear facilities remains unclear. The International Atomic Energy Agency is also still uncertain about Tehran’s stockpile of 409 kilograms (902 pounds) of highly enriched uranium — possibly enough for ten nuclear warheads.

© 2025 Bloomberg

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