Panama annulled key port contracts held by a subsidiary of Hong Kong-based CK Hutchison in its official gazette Monday, transferring interim operations of the ports to Danish shipping giants A.P. Moller-Maersk and Swiss-based Mediterranean Shipping Co.

The notice formalized a Supreme Court ruling last month that the concessions for the Balboa and Cristobal terminals near the Panama Canal, which Panama Port Company, a subsidiary of CK Hutchison, had held for more than two decades, were unconstitutional.

The Panamanian government on Monday formally assumed control of the port facilities, including cranes, vehicles, computer systems and software under a decree aimed at ensuring uninterrupted operations until a new concession is awarded within 18 months.

Under the interim arrangement, APM Terminals, a unit of Maersk, will operate the Balboa port on the Pacific side of the canal, while MSC’s port operating subsidiary, Terminal Investment, will run the Cristobal port on the Atlantic side.

Shares of CK Hutchison fell 0.9% at the open Tuesday. The stock has climbed over 20% so far this year.

CNBC reached out to CK Hutchison, Panama Ports Company, Maersk and MSC for comment but did not receive a response by publication.

The simmering dispute has become a geopolitical flashpoint between Washington and Beijing, with Panama caught in the crossfire.

After U.S. President Donald Trump alleged last year that China was “running the Panama Canal,” CK Hutchison negotiated a $23 billion deal with a BlackRock-led consortium to sell its non-Chinese port assets. Beijing swiftly intervened, describing the sale as  “kowtowing” to American pressure and stalling the transaction.

The Hong Kong conglomerate has pushed back since the ruling last month and initiated arbitration proceedings against Panama. On Feb. 12, CK Hutchison said that “any steps” that Maersk or its subsidiary takes to operate the ports without its agreement will likely “result in legal recourse.”

Beijing also warned that the Central American country will “pay a heavy price both politically and economically” unless it changes course.

The Panama court’s ruling was seen as a major victory for the U.S., given that the White House has made blocking China’s influence over the global trade artery one of its top priorities.

China has reportedly directed state firms to halt talks over new projects in Panama and urged shipping companies to consider rerouting cargo through other ports, Bloomberg reported last week.

— CNBC’s Emily Chan contributed to this story.

The U.S. Supreme Court’s decision to strike down President Donald Trump’s sweeping tariffs has strengthened China’s hand ahead of a summit with his counterpart Xi Jinping, where Beijing is expected to push for reduced U.S. support for Taiwan, analysts said.

In a ruling Friday, the court said Trump wrongfully invoked the International Emergency Economic Powers Act (IEEPA) to implement broad tariffs.

That decision has weakened Trump’s negotiating leverage as he prepared for a trip to Beijing in April, said Wendy Cutler, senior vice president at the Asia Society Policy Institute.

“He has effectively had his wings clipped on his signature economic policy,” said Cutler, who was also a former U.S. trade representative.

Trump will visit China from March 31 to April 2, the first trip by an American president since his last visit in 2017. Xi is also expected to make a state visit to Washington later this year.

Analysts said the ruling could change the dynamics around efforts to extend a trade truce negotiated last year and complicate Trump’s push for Beijing to buy large quantities of U.S. soybeans, Boeing aircraft and energy exports.

“It limits Trump’s ability to deploy tariffs at will, reduces pressure on Beijing to expand soybean purchases or ease rare earth access, and gives China leverage to push for the removal of the remaining 10% tariffs linked to fentanyl,” said Dan Wang, China director of Eurasia Group.

For Beijing’s part, it could use the opportunity to press Washington to ease technology export controls, remove certain Chinese entities from U.S. sanctions lists, and cut back arms sales to Taiwan, said Xinbo Wu, director at Fudan University’s Center for American Studies.

“[The ruling] certainly helps strengthen China’s position in its negotiation with the U.S,” Wu said.

While Trump’s tariff authority may be somewhat diminished, he could deploy non-tariff measures, such as technology controls and sanctions against Chinese entities, as negotiating tools, experts said.

“The measures with real structural impact remain non-tariff tools,” said Wang. These include expanded export controls on advanced chips and broader restrictions against Chinese tech firms, Wang said.

The U.S. stance on the Taiwan issue, disputes over the South China Sea and security ties with Japan and Korea still rest largely with Trump, he added.

In a statement Monday, China’s commerce ministry said it is currently assessing the impacts from the implementation of the ruling, while urging the U.S. to remove all unilateral tariffs against its trading partners.

“China and the U.S. both stand to gain from cooperation and lose from confrontation,” according to the ministry’s statement translated by CNBC.

Following the Supreme Court’s ruling, Trump responded with a 10% global tariff under Section 122 of the Trade Act of 1974 — before raising it further to 15%, which the president said would be “effective immediately.”

In a Truth Social post on Saturday, Trump dangled a warning that more tariffs would follow: “During the next short number of months, the Trump Administration will determine and issue the new and legally permissible Tariffs.”

It remains unclear if any official documents have been signed detailing the timing. A White House fact sheet issued Friday said the original 10% tariffs would go into effect on Tuesday, Feb. 24, at 12:01 a.m. ET.

Before the ruling, Washington had imposed an additional 20% tariff on Chinese exports last year —including a 10% reciprocal tariff and a 10% fentanyl-related tariff — citing IEEPA authority. The Supreme Court’s ruling implies a net reduction of around 5% in U.S. tariffs on China, according to Goldman Sachs.

“Overall, this development suggests upside risk to our positive outlook on Chinese exports this year,” Goldman said.

A study by the trade monitoring body Global Trade Alert also named China among the top winners under the revised Section 122 tariff regime, with a 7.1 percentage point reduction in tariff rates.

John Gong, a former consultant to China’s commerce ministry, said that Beijing is not “betting their strategy on the dispute between the executive and judicial branches of the [U.S.] government, although a lower tariff rate ‘is something nice to have.'”

Still, China faces an ongoing Section 301 investigation launched last year over its compliance with the Phase One trade deal from Trump’s first term.

The Office of the U.S. Trade Representative said in October last year that China appeared not to have met its commitments to expand market access, lower non-tariff barriers, and ramp up purchases of U.S. goods and services, despite repeated U.S. engagement to address implementation concerns.

“Once the U.S. has decided that a country is an ‘unfair’ trade partner, Section 301 comes with substantial flexibilities to use tariffs or other measures,” said Deborah Elms, head of trade policy at the Hinrich Foundation.

China said Monday that it is “watching closely” the U.S. move in using trade investigations to maintain higher tariffs, vowing to “firmly safeguard” Chinese interests.

The ruling may have a limited impact on broader U.S.-China relations, said Scott Kennedy from the Center for Strategic and International Studies, who noted that tensions extend beyond tariffs.

“The [Supreme Court] ruling doesn’t upend U.S.-China relations the way it might to U.S. ties with its allies and others, because China had already gained the upper hand,” he said.

Kennedy expects the April summit to yield limited results, such as an extension of the ceasefire and sales of U.S. products, but progress is unlikely on thornier issues such as clear guidelines for export controls or rebalancing China’s economy.

During a phone call earlier this month, Xi asserted to Trump that Taiwan is the “most important issue” in U.S.-China relations — overshadowing the commercial deals Trump touted at the time, including Chinese purchases of American energy and agricultural products.

Upcoming talks between the two leaders may prove more political than economic, said Minxin Pei, a professor of political science at Claremont McKenna College.

Xi might be “open to giving Trump a better commercial deal” in exchange for a statement on Taiwan that Beijing could claim as a victory, Pei said.

— CNBC’s Elaine Yu contributed to this story.

Asia-Pacific markets rose Monday amid tariff uncertainty as U.S. President Donald Trump announced over the weekend that he would increase global tariffs to 15% from 10%.

The move came on the heels of a U.S. Supreme Court decision striking down a broad swath of the president’s trade agenda enacted under the International Emergency Economic Powers Act of 1977, or IEEPA.

That said, U.S. trading partners are not off the hook, said Rystad Energy’s chief economist Claudio Galimberti.

“While the Supreme Court’s ruling invalidates a large share of existing tariffs and weakens the ability to target individual countries, it does not dismantle the broader tariff framework,” he wrote in a note following the announcement.

If the upper tariff limit is reached without prior IEEPA exemptions, the average rate could climb even higher than under the structure the Supreme Court just struck down, Galimberti added.

South Korea’s Kospi rose for a third straight session, jumping 1.7% to a fresh record high. Index heavyweights SK Hynix and Samsung Electronics rose over 3% and 2%, respectively.

The small-cap Kosdaq added 0.74%.

Australia’s S&P/ASX 200 added 0.17% in early trade.

Futures for Hong Kong’s Hang Seng index stood at 26,855, higher than its last close of 26,413.35.

Markets in China and Japan were closed for a holiday.

Oil prices were last seen trading lower, erasing earlier gains. International benchmark Brent crude futures fell 0.6% to $71.33 a barrel, while U.S. West Texas Intermediate futures were 0.78% lower at $65.96.

“The Supreme Court ruling is a setback … but it is not an end to his policy agenda,” said Arthur Laffer, Jr., president of Laffer Tengler Investments.

Laffer said countries such as Vietnam and India that struck trade deals with the U.S. should think twice before backing away from those agreements, arguing that trade remains a central pillar of Trump’s political and economic strategy and that the president is likely to keep pressing the issue.

On Friday, U.S. stocks rose after the Supreme Court ruling, potentially providing relief for companies burdened by higher costs from the duties and easing concern about sticky inflation still plaguing the U.S. economy.

The S&P 500 advanced 0.69% and closed at 6,909.51, while the Nasdaq Composite gained 0.9% and settled at 22,886.07. The Dow Jones Industrial Average added 230.81 points, or 0.47%, and ended at 49,625.97. The 30-stock index recovered from a 200-point loss earlier in the session on disappointing economic data.

— CNBC’s Sean Conlon and Pia Singh contributed to this report.

Tech giants have committed to funneling hundreds of billions of dollars into Indian AI efforts, against the backdrop of a major summit in the country that’s brought together world leaders and AI execs.

Record sums are being ploughed into AI as governments and companies across the globe race to roll out the technology. Hyperscalers — including the likes of Amazon, Microsoft, Meta and Alphabet — announced capital expenditure that could hit $700 billion on AI this year.

The past week has seen Indian tech group Reliance reportedly announcing plans to invest $110 billion into data centers and other infrastructure, and compatriot Adani outlining a $100 billion AI data center buildout over the next decade.

There were also big announcements from U.S. tech firms.

Microsoft said at the Indian AI Impact Summit that it was on pace to invest $50 billion in AI in the Global South by the end of the decade. OpenAI and chipmaker AMD both announced partnerships with Tata Group to build AI capabilities, and U.S. asset manager Blackstone also said it had participated in a $600 million equity raise for Indian AI infrastructure Neysa.

The commitments were announced during a summit that was also marked by points of controversy. Microsoft co-founder Bill Gates withdrew from the event amid public backlash for his past relationship with deceased financier and sex predator Jeffrey Epstein. An Indian university was also criticized after claiming it had invented a commercially available Chinese-made robot dog.

The AI Summit came as India pushes to be one of the world’s tech superpowers. The country has approved $18 billion of chip projects as it looks to bolster its local supply chain.

Meanwhile, the U.S. and India are edging towards a trade pact that would lower tariffs and increase economic cooperation between the two countries. Tech ties were deepened further at the event.

Representatives from both governments signed the Pax Silica agreement, a U.S.-led initiative launched by the Trump administration aimed at securing the global supply chain for silicon-based technologies.

The potential tech groups see in the market was evident in the roster of names in attendance. OpenAI CEO Sam Altman, Alphabet CEO Sundar Pichai, Anthropic boss Dario Amodei and Google DeepMind CEO Demis Hassabis were all on the billing.

U.S. chip darling Nvidia announced it was expanding partnerships with venture capital firms in India as it looks to deepen exposure to promising tech companies being developed in the ecosystem.

While India’s public markets were booming towards the end of 2025, private capital is still lacking, Anirudh Suri, founding partner of the India Internet Fund, told CNBC.

“What we’ve not maybe seen as much of right now is venture capital and private equity money to come in to invest in Indian entrepreneurs in the AI space,” he said.

While India is seen as lagging behind the likes of the U.S. and China at the frontier of AI development, Microsoft President Brad Smith told CNBC that this could change in certain domain-specific areas.

“If you look at the…engineering talent, you quickly conclude India too can be a place where models are developed,” he said. There will be a “variety of different DeepSeek moments” to come in the future and some of those will be in India, alongside places like China and other countries, Smith added.

But some say India is still playing catchup.

“India is making splashy attempts to kickstart its belated AI push, but it is doing so primarily by offering headline-grabbing sops without addressing many of the underlying difficulties of actually doing business in India,” Udith Sikand, senior emerging markets analyst at financial research firm Gavekal, told CNBC.

Oil prices hovered near six-month highs on Friday after U.S. President Donald Trump warned Iran that “really bad things” will happen if there was no deal over its nuclear program.

International benchmark Brent crude futures with April delivery traded 0.5% lower at $71.33 per barrel at around 12:52 p.m. London time (7:25 a.m. ET), erasing earlier gains, while U.S. West Texas Intermediate futures with March delivery stood 0.5% lower at $66.07.

Both contracts notched their highest settle in six months in the previous session as energy market participants continue to monitor supply risks in the oil-rich Middle East.

The U.S. and Iran have held talks in Switzerland this week to try to resolve a standoff over Tehran’s nuclear program. Initial reports of progress, however, gave way to accusations from Washington that Iran had failed to address core U.S. demands.

Speaking at the first meeting of his Board of Peace in Washington on Thursday, the U.S. president said “bad things will happen” if Tehran doesn’t agree to a deal over its nuclear program.

Trump added that the world will likely find out over the next 10 days whether the U.S. will reach a deal with Iran or take military action. He later told reporters aboard Air Force One that he wanted an agreement within “10 to 15 days.”

His comments come after a significant buildup of U.S. military forces in the Middle East and amid reports the White House is considering fresh military action against Tehran as soon as this weekend.

Trump said Iran’s nuclear potential had been “totally decimated” by U.S. strikes on its facilities in June last year, before adding “we may have to take it a step further or we may not,” without providing further details.

Iran reportedly said in a letter to United Nations Secretary-General Antonio Guterres on Thursday that Tehran will respond “decisively” if subjected to military aggression.

The Islamic Republic has conducted military drills in the strategically vital Strait of Hormuz in recent days, as well as joint naval drills with Russia in the Gulf of Oman, also known as the Sea of Oman.

“Everything is in place, or will be by Saturday night, for strikes to commence and so the window opens then,” Daniel Shapiro, former U.S. ambassador to Israel, told CNBC’s “Access Middle East” on Friday.

“Doesn’t mean that’s going to happen immediately. The president did indicate that he is waiting to hear from Iran whether they are prepared to make concessions on their nuclear program that he’s insisting on,” Shapiro said.

“I think it’s unlikely. We have never seen Iran open to those types of concessions, so I think it is unlikely they will agree to those, which means that in the days coming, the president will have to make that decision on military strikes,” he added.

The Trump administration has said it still hopes to reach a diplomatic resolution over Tehran’s nuclear program, with White House press secretary Karoline Leavitt saying on Wednesday that it would be “very wise” for Iran to make a deal.

Martijn Rats, chief commodity strategist at Morgan Stanley, said that, while the oil market is “very well supplied” on a global basis, there are three factors propping up prices.

“Worries about Iran, clearly. Also, an unusually large amount of buying by China, simply for stockpiling purposes. It makes you wonder what they are going to do with all these inventories and then also we have very high freight rates,” Rats told CNBC’s “Europe Early Edition” on Friday.

“The factor of those three that is most prominent, of course, is the issue in Iran,” Rats said.

Strategists at Barclays said Friday that while equity markets have largely shrugged off the geopolitical noise so far, tensions have been rising since Vice President JD Vance accused Iran of failing to discuss so-called “red lines,” alongside reports of increased U.S. military capability in the region.

“We believe that any strike would likely have to be time limited and with defined targets (nuclear, ballistic missiles), as they were last summer,” the strategists said in a research note.

“With midterm elections later this year and the administration prioritizing affordability for US consumers, we suspect their willingness to tolerate a prolonged period of significantly higher oil prices, and potentially casualties too, will be limited,” they continued. “So if conflict is imminent it is likely to be short lived, in our view.”

South Korea’s Kospi touched a record high for a second straight day on Friday, powered by a rally in chip and defense stocks.

Index heavyweight SK Hynix rose 6.15%, while defense giant Hanwha Aerospace jumped 8.09%.

The index closed 2.31% up at 5,808.53.

Other Asia-Pacific markets were mostly lower on Friday, after all three major Wall Street indexes declined overnight pressured by a drop in private credit stocks and Iran-U.S. tensions.

Prospects of a strike on Iran have risen with U.S. President Donald Trump saying that he would take a call on military action against Tehran in the next 10 days.

Oil prices extended gains in reaction to that news, with U.S. crude rising 0.93% to trade at $67.05 per barrel on Friday. Global benchmark Brent gained 0.33% to $71.9.

Traders in Asia assessed Japan’s inflation data, with headline inflation for January dipping below the Bank of Japan’s 2% target for the first time in 45 months.

Japan’s Nikkei 225 fell 1.12% to 56,825.7, dragged by consumer cyclical stocks, while the Topix was 1.13% lower and closed at 3,808.48.

Shares of Sumitomo Pharma, one of the country’s largest pharmaceutical companies, were volatile in early trade, climbing as much as 6.81% before plunging. The stock closed 15.6% lower.

Separately, Japan’s Prime Minister Sanae Takaichi in her first policy speech in Japan’s parliament, reportedly warned against China’s “coercion,” saying that it “intensified its attempts to unilaterally change the status quo … in the East China Sea and South China Sea.”

Takaichi also pledged to break with “excessive fiscal austerity” in Japan and increase investments in areas like AI, chips and shipbuilding, while adding that her government would not pursue “reckless fiscal policies.”

Japanese government 10-year bond yield fell 4 basis points.

Hong Kong’s Hang Seng index fell 0.98% to close at 26,443.69, dragged by tech stocks. Mainland China’s markets were closed for the Lunar New Year holiday.

Australia’s S&P/ASX 200 ended marginally lower at 9,081.4.

Overnight in the U.S., private credit and software stocks were also under pressure, with the Dow Jones Industrial Average shedding 0.54%, and the broad-based S&P 500 slipped 0.28%. The tech-heavy Nasdaq Composite lost 0.31%.

—CNBC’s Sean Conlon and Pia Singh contributed to this report.

Correction: This article has been updated to reflect that Hong Kong markets are open today.

Shares of Japanese drugmaker Sumitomo Pharma fell over 12% Friday on what appeared to be profit-taking, a day after the government endorsed the company’s iPS cell-based therapy for Parkinson’s and heart disease.

Sumitomo Pharma’s stock, which rose more than 300% in 2025, hit its highest level since 2019 last week amid growing confidence in its Parkinson’s therapy. The therapies rely on induced pluripotent stem (iPS) cells — adult cells that are reprogrammed back into a stem-cell-like state.

Stem cells are are capable of self-renewal and work as a repair system, replacing damaged cells and maintaining tissues, allowing them to be used in regenerative medicine.

“While the treatment could potentially see widespread use and become a blockbuster in Japan and the US over the long term, we expect almost no profit contribution near term,” said Citigroup Global Markets Japan’s analyst Hidemaru Yamaguchi.

Sumitomo’s stock has been overheated, and recent gains have been “excessive,” he added.

According to Japan’s Ministry of Health, Labor and Welfare, formal approval will be granted within the next one to two months, NHK reported.

The endorsement comes years after Kyoto University professor Shinya Yamanaka, who later won a Nobel Prize for his stem cell research, first succeeded in generating iPS cells from mice in 2006.

Japan has been striving to develop stem-cell therapies, with Kyoto University’s CiRA, which runs a clinical-grade iPS cell bank, providing researchers access to prepared cells that can be used in trials for a range of conditions.

Sumitomo Pharma develops and markets prescription medicines across multiple therapeutic areas, including neuroscience, oncology and regenerative medicine.

Japan’s headline inflation rate fell to 1.5% in January, its lowest level since March 2022.

The reading ended a run of 45 straight months in which inflation had remained above the Bank of Japan’s 2% target.

Core inflation rate, which excludes fresh food prices, eased to 2%, the lowest level since January 2024 and matching the 2% forecast by economists polled by Reuters. It was down from 2.4% in December.

The so-called “core-core” inflation — excluding prices of fresh food and energy — came in at 2.6%, compared with 2.9% in December.

The slowdown was driven by declines in fresh food, raw meat and fresh flower prices, as well as a sharper drop in petroleum products.

Goods inflation fell to 1.6% from 2.7%, its lowest level since August 2021, while services inflation held steady at 1.4%.

In January, the Bank of Japan upgraded its inflation forecasts for fiscal 2026, which begins April 1. It projected core inflation at 1.9% and “core-core” inflation at 2.2%, up from 1.8% and 2%, respectively, in its October 2025 outlook.

The BOJ also wrote in its outlook that the year-over-year rise in consumer prices is likely to fall below 2% in the first half of 2026, as food prices stabilize and government efforts to ease living costs.

Rice inflation slowed for an eighth straight month to 27.9%.

Among those measures is an election pledge by Prime Minister Sanae Takaichi to suspend an 8% food tax for two years.

Takaichi swept to a landslide victory in the Feb. 8 Lower House election, with the ruling Liberal Democratic Party winning 316 seats, the strongest showing by a single party since the end of World War II.

The inflation reading comes after Japan’s economy grew 0.1% in the fourth quarter on Monday, narrowly avoiding a technical recession.

Despite the slowdown in headline inflation, the Bank of Japan is unlikely to delay rate hikes, according to Norihiro Yamaguchi, lead Japan economist at Oxford Economics.

He said fresh-food prices remain volatile, while energy costs fell after Japan scrapped its fuel tax in December.

As a result, the core-core index, which excludes fresh foods and energy, provides a clearer gauge of underlying price pressures, easing only gradually to 2.6% from 2.9%.

Yamaguchi expects the BOJ to raise rates to 1% at its June meeting, after assessing spring wage negotiation data.

The Trump administration has warned it would be “very wise” for Iran to make a deal, amid reports the White House is considering fresh military action against Tehran as soon as this weekend.

It comes shortly after Vice President JD Vance accused Iran of failing to address core U.S. demands during nuclear talks in Switzerland this week. Iran’s foreign minister previously reported progress in the talks, saying the two countries had reached an understanding over the “guiding principles” for the negotiations.

Speaking at a news briefing Wednesday, White House press secretary Karoline Leavitt said that there were “many reasons and arguments that one could make for a strike against Iran,” noting that the two countries remain “very far apart” on some issues.

U.S. President Donald Trump had a “very successful” operation last June, Leavitt said, when U.S. stealth bombers struck three Iranian nuclear facilities as part of “Operation Midnight Hammer.”

“The president has always been very clear though with respect to Iran or any country around the world, diplomacy is always his first option. And Iran would be very wise to make a deal with President Trump and this administration,” Leavitt said.

The White House has said it still hopes to reach a diplomatic resolution over Tehran’s nuclear program, although U.S. media has reported that the military could be prepared to strike Iran as early as the weekend.

Both the U.S. and Iran have increased military activity in the oil-producing Middle East region in recent weeks.

The U.S., for its part, has built up a significant presence of air and naval assets, while Iran has conducted military drills in the strategically vital Strait of Hormuz and announced joint naval drills with Russia in the Gulf of Oman, also known as the Sea of Oman.

Laura James, Middle East senior analyst at Oxford Analytica, described the current situation as “extremely dangerous,” with the U.S. and Iran “certainly closer” to an outright conflict than last week.

“The thing that is now a particular concern over the past 24 hours is the very rapid pace at which the United States is reinforcing its air power in the region. That, of course, can still be signaling and pressure for a particular diplomatic outcome,” James told CNBC’s “Access Middle East” on Thursday.

“But as more and more planes come in and more and more equipment comes in, that signaling gets more and more expensive. And therefore, the payoff you want for it in diplomatic terms has to be larger — and there is simply no sign Tehran can offer the absolute minimum that Washington is likely to demand,” she added.

Oil prices

Energy market participants have been closely watching the outcome of the U.S.-Iran talks in Geneva, particularly as it relates to the Strait of Hormuz, a major international waterway that Iran partially closed on Tuesday citing “security precautions.”

Located in the gulf between Oman and Iran, the Strait of Hormuz is recognized as one of the world’s most important oil choke points.

About 13 million barrels per day of crude oil transited the Strait of Hormuz in 2025, accounting for roughly 31% of global seaborne crude flows, data provided by market intelligence firm Kpler showed.

Oil prices were higher on Thursday, extending gains after settling up more than 4% in the previous session.

International benchmark Brent crude futures with April delivery rose 1.5% to $71.41 per barrel, while U.S. West Texas Intermediate futures with March delivery stood 1.7% higher at $66.27.

— CNBC’s Lee Ying Shan contributed to this report.

Correction: White House press secretary Karoline Leavitt said Wednesday that there were “many reasons and arguments that one could make for a strike against Iran.” An earlier version misquoted her. Laura James, Middle East senior analyst at Oxford Analytica told CNBC on Thursday, “But as more and more planes come in and more and more equipment comes in, that signaling gets more and more expensive.” An earlier version misquoted her.

U.S. Energy Secretary Chris Wright said on Thursday that the U.S. would “pressure” the International Energy Agency to move away from net zero — and quit from the global watchdog if it failed to do this.

Wright was speaking on the last day of an IEA ministerial meeting in Paris and shortly after he said the agency would need to reform for the U.S. to remain a long-term member.

“There has been such a group mentality, 10 years invested in a destructive illusion of net zero by 2050, that the U.S. will use all the pressure we have to get the IEA to eventually, in the next year or so, move away from this agenda,” Wright said, according to Reuters.

The 2015 Paris Agreement committed nations to “net zero”, the balancing of carbon emitted into the atmosphere and removed from it. The U.S., India and the European Union were among the polluters that ratified the accord.

Wright added that it was not Washington’s intention to leave the IEA, as there’s “always a risk” China could gain dominance in the agency if it did.

CNBC has reached out to the U.S. Department of Energy and the IEA for comment.

The IEA, which was established in 1974 to ensure the security of oil supplies, faced criticism from the Trump administration last year when it projected that “peak oil”, when global crude production will reach its highest point before entering an irreversible decline, will take place around 2030.

OPEC, the influential group of oil-exporting countries, accused the energy agency of fearmongering and risking the destabilization of the global economy. Wright called the IEA’s forecast “nonsensical.”

The energy watchdog later watered down its forecast, signaling in a major tonal shift that oil demand could keep growing through to the middle of the century.

Scientists have warned that global average temperatures must not increase by more than 1.5 degrees Celsius, if the worst of the climate crisis is to be avoided.

This threshold is recognized as a crucial long-term target because tipping points become more likely beyond this level. Tipping points can lead to dramatic shifts or potentially irreversible changes to some of Earth’s largest systems.