President Donald Trump announced Tuesday that China is now authorized to resume purchasing oil from Iran, ending a years-long U.S. policy that barred such transactions through sanctions targeting Tehran’s energy sector.

Trump made the announcement while en route to Europe aboard Air Force One, posting on social media that the policy change would also encourage additional Chinese purchases of U.S. oil.

“China can now continue to purchase Oil from Iran. Hopefully, they will be purchasing plenty from the U.S., also. It was my Great Honor to make this happen!” he wrote.

The decision marks a significant shift in U.S. sanctions policy.

Restrictions on Iranian oil exports were first reinstated by the Trump administration in 2018, following the withdrawal from the Obama-era nuclear agreement with Iran.

Since then, the U.S. had imposed additional penalties on Iran’s oil trade, including sanctions on three Chinese oil importers.

Tuesday’s announcement comes amid ongoing efforts by the Trump administration to stabilize oil markets and de-escalate tensions in the Middle East.

Over the past week, President Trump successfully brokered a ceasefire between Iran and Israel following days of hostilities, easing investor fears that Tehran might close the Strait of Hormuz — a strategic maritime corridor that carries roughly one-fifth of global oil supply.

Oil prices fell sharply in the wake of the ceasefire and the easing of sanctions.

West Texas Intermediate (WTI) crude futures dropped more than 8% on Monday to approximately $67 per barrel.

Brent crude, the international standard, also declined, settling at $70 per barrel.

By Tuesday, crude prices in extended trading dipped further, with WTI reaching $65 per barrel.

The U.S. Energy Secretary Chris Wright appeared on Fox News to address concerns about potential disruption to global oil supply if Iran were to follow through on threats to close the Strait of Hormuz.

“The United States today is a net oil exporter. We don’t count in any meaningful way on oil coming out of that strait,” Wright said.

“Iran would harm itself more than it would harm anyone else. It’ll probably cause a mess or trouble, but it’ll be small.”

Industry analysts had previously warned that any disruption in the Strait could drive oil prices as high as $120 per barrel.

However, the Trump administration’s ceasefire initiative, combined with Tuesday’s policy change on China-Iran oil trade, appears to have calmed markets for now.

The lifting of sanctions on Chinese oil imports from Iran is also expected to boost diplomatic and economic coordination between the United States and China, particularly in energy trade.

The administration has signaled that it expects China not only to take advantage of resumed Iranian imports but also to increase purchases of American crude.

The Trump administration has not indicated whether other countries will be granted similar waivers to resume oil trade with Iran or whether further policy changes are forthcoming in relation to U.S. sanctions.

The situation remains fluid as energy markets continue to respond to the Trump administration’s diplomatic actions and evolving Middle East developments.