President Trump announces plan to exempt certain oil penalties amid escalating Iran conflict that's disrupting global markets

US President Donald Trump announced on Monday that he would be waiving certain sanctions on oil to increase supply and reduce prices, amid market instability caused by the war in the Middle East.

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This move comes as the US-Israel strikes on Iran and Tehran's retaliatory attacks have significantly disrupted the global energy and transport sectors, effectively bringing activity in the Strait of Hormuz to a standstill.

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Trump revealed this decision after speaking with Russian President Vladimir Putin, stating "We're also waiving certain oil-related sanctions to reduce prices," and also mentioned Chinese President Xi Jinping in his comments.

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The US President added that "We have sanctions on some countries, we're going to take those sanctions off till this straightens out," although he did not specify which countries or sanctions would be lifted.

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Trump's comments followed a conversation with the leader of Russia, one of the world's largest oil producers and exporters, while China is a key Russian trading partner and major oil importer.

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On Tuesday, oil prices dropped and equities rallied, following a day of significant fluctuations, after Trump suggested that the US-Israel war on Iran might end sooner than expected.

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Trump also hinted that Washington could potentially keep sanctions lifted on certain countries if the war were to come to an end, saying "Then who knows, maybe we won't have to put them on, there'll be so much peace."

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Additionally, Trump reiterated that the United States is prepared to escort tankers through the Strait of Hormuz, a vital waterway through which a fifth of global oil supplies typically pass.

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US Treasury Secretary Scott Bessent had previously stated that Washington was considering lifting sanctions on more Russian oil, after temporarily authorizing India to purchase oil from Moscow.

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The US government had temporarily eased economic sanctions to allow Russian oil currently stranded at sea to be sold to India, with these transactions authorized until April 3, 2026.

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Trump's recent comments appear to reflect concerns within his administration about the impact of rising crude prices on American consumers ahead of the crucial midterms in November.

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Trump also described his call with Putin as "positive" regarding the subject of ending the four-year-old war in Ukraine.

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Easing sanctions on Russia could help boost global oil supplies, but it also presents a dilemma for Washington in its efforts to limit Russian revenues amidst the ongoing war in Ukraine.

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Moscow's invasion of Ukraine and subsequent Western sanctions have significantly reduced its oil and gas revenues, which fell to a five-year low in January.

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The Russian economy has been struggling, with the financial burden of the war in Ukraine and ensuing restrictions leading to increased inflation and decreased growth.

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Russian state coffers rely heavily on sales of oil and gas, but in October 2025, Washington added Moscow's two largest oil producers, Lukoil and Rosneft, to its blacklist of sanctioned entities.

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The recent crude price increases have caused concern among importers worldwide, including Asia, with South Korea ordering the activation of a $68 billion market stabilization fund.

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Japan is reportedly considering drawing on national oil reserves, with queues at petrol stations seen in countries such as Vietnam, Myanmar, and the Philippines.

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However, experts believe that Washington's actions against Iran and the ousting of Venezuelan leader Nicolas Maduro in January have inadvertently provided a lifeline for Moscow by turning top importers away from discounted crude from those two countries.

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The Carnegie Russia Eurasia Center noted in a recent analysis that "Now that those supplies are compromised, the primary beneficiary is Russia, which is ready to increase oil exports to China."

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Trump's interventions give Moscow an opportunity to emphasize that "maritime routes for supplying resources to China could be cut off at any moment by the United States," and that "the only reliable option is pipelines and roads from Russia."