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Trump's Iran Sanctions Bluff: Oil Markets Call His Poker Face

President Trump's recent directive on Iran sanctions, expected to invigorate oil markets, has instead introduced ambiguity, cooling the perceived risk of supply disruptions. The directive's lack of specifics and Trump's own ambivalence have led to a reassessment of potential impacts on crude prices. During his campaign, Trump promised a return to the "maximum pressure" strategy, reminiscent of his first term, aimed at curtailing Tehran's oil exports. However, his recent comments expressing reluctance to enforce the order aggressively have tempered market expectations.

This uncertainty has prompted refiners in China and India to seek alternative sources, reducing the urgency to replace Iranian oil. Meanwhile, OPEC+ members, who might have considered ramping up production in response to tighter sanctions, may hold off on such decisions, potentially stabilizing or even lowering oil prices. Additionally, the market's focus is shifting towards the brewing US-China trade tensions, further contributing to the downward pressure on oil prices.

As of 05:21 on February 5, Brent crude futures are trading at $75.51, down from the last close of $76.20. The market's reaction reflects the diminished fear of immediate supply shortages and the broader geopolitical landscape's influence on trader sentiment.