The United States is permitting Iranian tankers to go through the Strait of Hormuz, Treasury Secretary Scott Bessent revealed on Monday.
Bessent, who is in France for talks with Chinese officials ahead of President Donald Trump’s trip to Beijing, said the US Navy was allowing the tankers passage through the vital sea lane to alleviate the blockade that has choked global supplies of oil and gas.
“The Iranian ships have been getting out already, and we’ve let that happen to supply the rest of the world,” Bessent told CNBC.
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The White House believes more tankers will be able to transit through the Strait before US Navy vessels – and possibly warships from some allies – start escorting commercial ships, Bessent said.
He said tankers that supply India and some Chinese ships have been able to go through the Persian Gulf and the Strait of Hormuz.
“We think that there will be a natural opening that the Iranians are letting out, and for now we’re fine with that. We want the world to be well supplied,” Bessent said.
China trip could be delayed: Trump
His comments followed moves by President Trump on Sunday to pressure NATO, other allies – and even China – to help ease the oil blockade and protect tankers from attacks by Iran.
Trump said his trip to China, scheduled at the end of this month, could be delayed as they seek to alleviate the oil crisis caused by the blockade in the Strait.
In an interview with the Financial Times, Trump said he expected China to help unblock the strait before he travels to Beijing for a summit with Chinese leader Xi Jinping, which is currently scheduled for March 31 to April 2.
Trump said the two weeks till the trip were a “long time” and that Washington wanted clarity before then. “We may delay,” Trump told the FT, without elaborating on timing.
Bessent said on Monday that any delay would not be because Trump had asked China to help police the strait and stop Iranian attacks.
“The President wants to remain in DC to coordinate the war effort, and that traveling abroad at a time like this may not be optimal,” he was quoted as saying by Reuters.
The Treasury Secretary said his meetings with Chinese Vice Premier He Lifeng had been “very good” and benefitted from the two superpowers’ “stable relationship”.
Oil prices have surged about 40% since the US and Israel attacked Tehran on February 28, killing its Supreme Leader Ayatollah Ali Khamenei.
The war has sparked the biggest disruption of global oil supplies as Iran has struck close to a dozen tankers with missiles and aerial or sea drones. Hundreds more vessels have refused to try to get through the Strait, causing a rush for oil and gas in countries all across Asia and other parts of the world.
Attacks on Kharg Island
The price of crude shot up in the opening minutes after Trump said on the weekend that forces struck military targets on Kharg Island, a scrubby stretch of land in the Gulf that handles almost all of Iran’s oil exports.
He also warned attacks could expand to energy infrastructure if the Islamic republic interferes with transit through Hormuz, which has been effectively closed since the US-Israel operations began two weeks ago.
Iran’s Fars news agency reported soon after that no oil infrastructure was damaged in strikes.
Trump urged other countries to send warships to keep the waterway open but offered no specifics or commitments from the US side, saying he hoped China, France, Japan, South Korea and the UK would take part.
He later wrote Saturday in a Truth Social post: “The Countries of the World that receive Oil through the Hormuz Strait must take care of that passage, and we will help — A LOT!
“This should have always been a team effort, and now it will be.”
However, Japan said on Monday it was “not at the moment considering issuing a maritime security operation,” while Australia, which has vowed to help the United Arab Emirates defend itself from missile attacks, announced it would not send any navy ships to the region.
Europeans cool on involvement
Britain and Germany have both said the war in Iran is not a conflict NATO wants to get involved in, while Italy and Greece have also ruled out military intervention in the Strait of Hormuz.
Trump said Tehran wanted a deal to end the fighting, but that he was not prepared to make one on current terms, without giving further details.
But Iran’s Foreign Minister Abbas Araghchi said his country was not interested in talks with Washington. “We don’t see any reason why we should talk with Americans, because we were talking with them when they decided to attack us,” he told CBS’s “Face The Nation” in an interview aired Sunday.
“We never asked for a ceasefire, and we have never asked even for negotiation,” he added.
But he did say he was ready to speak to countries “who want to talk to us about the safe passage of their vessels”.
“I cannot mention any country in particular, but we have been approached by a number of countries” seeking such safe passage, Araghchi said.
The two sides continued to exchange fire on Monday, with Saudi Arabia saying it had intercepted more than 60 drones since midnight, while flights were temporarily suspended at Dubai’s airport after a “drone-related incident” sparked a fire nearby.
Traders hoping for an early end to the conflict were left disappointed after Trump’s top economics adviser Kevin Hassett said the Pentagon estimates it could take up to six weeks, though the operation was ahead of schedule.
Oil edges higher, Asian markets down
Both main crude contracts advanced, with Brent up around 3% to as high as $106.50 before paring the gains to about $104, while West Texas Intermediate climbed more than 2% to top $100.
With worries growing about a possible energy crisis that could hammer the global economy, equity markets remained under pressure.
Tokyo, Shanghai, Sydney, Wellington, Taipei, Manila, Mumbai, Bangkok and Jakarta were all down, though Hong Kong, Seoul and Singapore rose.
London, Frankfurt and Paris rose at the open.
“The impact of geopolitical events on markets, and the macro outlook, hinges more on when transits through the Strait of Hormuz begin to normalise, than it does on when hostilities come to an end,” wrote Michael Brown at Pepperstone.
“The longer the Strait is impassable, the tighter commodity supply will become, thus the higher prices will likely go, and the greater the inflationary impulse that will follow.”
Adding to economic concerns was data showing Friday that fourth-quarter US gross domestic product expanded 0.7%, much slower than the initial reading of 1.4%.
And delayed figures showed the Federal Reserve’s preferred inflation gauge dipped to 2.8% in January before energy prices shot higher.
“Developments over the weekend, while no more disconcerting than at the end of last week, don’t offer any obvious pretext for a less pessimistic start to the new trading week,” warned National Australia Bank’s Ray Attrill.
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