Iran's Oil Flow: A Geopolitical Tightrope as Trump Returns

As the 2024 U.S. presidential election results are in, the world watches with bated breath as former President Donald Trump prepares to retake the White House. One of the key geopolitical dynamics that will be under scrutiny is the flow of Iranian oil, which has been a contentious issue during Trump's previous tenure. With Trump's return, the global oil market braces for potential shifts in U.S. policy, which could significantly impact oil prices and supply dynamics.

During his first term, Trump led a maximum pressure campaign against Iran, aiming to curb its oil exports and limit Tehran's access to petrodollars. The campaign was successful in reducing Iranian crude exports to their lowest levels in decades. However, under President Joe Biden's leadership, Iran's oil flows have rebounded, reaching record highs in 2024. This resurgence has been facilitated by Iran's strategic partnerships, particularly with China, which has enabled Tehran to circumvent U.S. sanctions through alternative payment methods and the use of middlemen.

With Trump's return, the U.S. could once again tighten the screws on Iran's oil exports. Energy Aspects, a leading energy consulting firm, estimates that a Trump administration could decrease Iranian crude exports by up to 1 million barrels per day (bpd) through stricter enforcement of U.S. sanctions. This reduction in supply could support global oil prices, as Iranian crude accounts for a significant portion of the world's oil exports. However, the impact on oil prices may be offset by other Trump policies, such as measures to expand domestic drilling or an easing of relations with Russia, which could unfetter its sanctioned crude shipments.


The potential tightening of U.S. sanctions on Iran's oil exports raises questions about China's willingness to continue purchasing Iranian crude. As Iran's top customer, China has been a key player in helping Tehran evade U.S. sanctions. However, a tougher stance from the U.S. could strain U.S.-China relations and potentially lead China to strengthen ties with the BRICS club, reducing its reliance on the dollar in deals and posing risks to dollar dominance.

Moreover, a Trump presidency could significantly impact global oil dynamics, particularly with Iran and China. Trump's maximum pressure campaign on Iran could decrease Iranian crude exports by up to 1 million bpd, but enforcing sanctions on China, Iran's top customer, may be challenging. A trade war with China could reduce global GDP, lowering oil demand and offsetting any bullish effects from Iran sanctions.


In conclusion, the return of Donald Trump to the White House could have significant implications for the global oil market, particularly with regard to Iran's oil exports. Stricter enforcement of U.S. sanctions could support global oil prices, but the impact may be offset by other Trump policies. The geopolitical dynamics between the U.S., Iran, and China will be crucial to monitor, as they could shape the future of the global oil market. Investors should stay informed about these developments and maintain a balanced approach, considering both macroeconomic factors and company-specific fundamentals, while remaining flexible to adapt to changing market conditions.