Trump’s Iran Oil Comments Strain His ‘Maximum Pressure’ Policy

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(Bloomberg) — President Donald Trump indicated that he might be preparing to ease his “maximum pressure” campaign against Iran, potentially undercutting a central policy dating to his first term and provoking consternation among foreign policy hawks who argue that now is the time to escalate — not lessen — pressure on Tehran.

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Days after US airstrikes that he said had “totally obliterated” Iran’s nuclear facilities, the president posted on social media that “China can now continue to purchase oil from Iran.” That was a dramatic shift from May when he asserted all purchases of Iranian oil and petrochemical products “must stop, NOW!”

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And during the NATO summit in the Netherlands this week, he said Iran would “need money to put that country back into shape.”

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“If they’re going to sell oil, they’re going to sell oil,” Trump added, in apparent disregard of policies his administration had imposed as part of a campaign intended to squelch Iran’s oil exports entirely.

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The online post, made after Trump declared that Iran and Israel had agreed to a ceasefire following nearly two weeks of conflict, confounded oil traders and some members of his administration. It was yet another reminder for the president’s friends and foes alike of just how abrupt his policy swings can be.

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“If there ever was a time for maximum pressure, it would be now, on the back end of a strike,” said Behnam Ben Taleblu, Iran Program senior director at the Foundation for Defense of Democracies. His group has been a prominent advocate for tougher economic restrictions on Iran for years.

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“Washington needs a strategy to constrain the resources and revenues available to this group to make sure they can’t build back better,” he said.

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Trump initiated the stricter approach during his first term after withdrawing from the nuclear accord that the Obama administration struck with Iran in 2015. He reinstated the policy through a National Security Presidential Memorandum weeks into his second administration.

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That led to a series of fresh sanctions targeting Iran’s oil industry — the country’s top source of revenue — and its supply chains even as Washington held talks with Tehran over its nuclear program.

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Now Trump could be considering new talks with Iran with the prospect of sanctions relief as a “big carrot,” according to Dina Esfandiary, Middle East geoeconomics lead for Bloomberg Economics.

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“I think his statements are an effort to lay the groundwork for the easing of sanctions and ‘maximum pressure’ itself,” Esfandiary said.

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Key to that would be relaxing restrictions on China’s oil purchases. Although shipments have slowed recently because of tougher US sanctions and weaker demand, third-party data show China remains the largest consumer of Iranian oil, with independent refiners known as teapots the biggest buyers.

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To circumvent sanctions, some Iranian oil imports are masked as shipments from other countries like Malaysia.

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Zineb Riboua, senior fellow at the Hudson Institute’s Center for Peace and Security in the Middle East, warned against scaling back restrictions on Iran’s oil trade, arguing that China’s purchases “indirectly helps fund Iran’s military arsenal” and its proxy networks.