Trump's U-Turn on China Buying Iranian Oil

Oil Price & Market Dynamics - Oil prices experienced a significant drop, with WTI showing a slight upside in early Asian trading sessions following a double-digit percentage slump over the past two days [1][3] - US crude stockpiles showed another drop, contributing to a roughly 5% decline in New York-traded crude prices over two days [4] - President Trump signaled a desire to maintain Iranian oil flow, a shift from previous strategies of restricting Iranian energy exports [2] Geopolitical Factors & Risk - A fragile ceasefire brokered by President Trump between Israel and Iran reduces the risk premium on oil supplies, but the situation remains unstable [4][5][7] - The US essentially gave China, Iran's largest crude customer, the go-ahead to continue purchasing Iranian oil, potentially as an olive branch amid trade uncertainties [5] - China's approach to importing Iranian oil remains uncertain given potential sanctions [6] Iran's Situation & Strategy - Iran's proxy network, including Hezbollah, has been significantly weakened but retains some capacity to cause damage, with estimates suggesting Hezbollah still possesses approximately 20% of its missile capacity [10][11] - Iran's primary focus is regime survival, potentially opening a window for nuclear diplomacy and negotiation [13][14] - The Iranian regime is interested in maintaining its proxy network, no matter how weak, and will review its military deterrence strategy [12] Potential for Future Conflict - Israel, particularly the Prime Minister, remains concerned about Iran's ability to reconstitute its nuclear fuel capacity, potentially hindering long-term peace [8] - The question remains whether Israel will halt military action against Iran, and whether the US President will pressure the Israeli Prime Minister to do so [15][16]