Oil surges, gold, and stocks slip as the SOH blockade lingers despite the Trump-Xi meeting
·
The SOH may not reopen soon, as China maintains protocol-based
diplomacy, while Trump seeks truth-based diplomacy and an immediate face-saving opening.
·
China will not pressure Iran to accept Trump’s
bellicose terms and surrender itself before the US unconditionally.
·
Trump may launch a surgical strike on Iran BY
August to snatch away the so-called nuclear dust if Iran does not agree to
transfer the same to China ‘peacefully.’
On May 14, 2026, U.S. President Trump met with his Chinese counterpart,
President Xi Jinping, in Beijing for a high-stakes bilateral summit at the
Great Hall of the People. Although officially the summit was focused on
improving bilateral trade and diplomacy between the two largest economies in
the world, comprising almost 50% of the global economy, the focus of the market
was on the reopening of the Strait of Hormuz (SOH) amid ongoing Iran &
Middle East geopolitical tensions and the war of attrition. The war-mongering
stance of Trump and Israel led to the Iran war and the closure of the SOH—a
narrow, but one of the most vital sea choke points on earth, through which
around 20% of global seaborne oil and significant liquefied natural gas (LNG)
passes.
The SOH ─ now under double blockade by both the US and Iran—is causing
soaring prices of fuel, fertilizer, and also food, not only in India but also
in China, Japan, South Korea, and even in the US and virtually all over the
world. This is like a synchronized global stagflation.
The much-awaited meeting between Presidents Trump and Xi occurred against
a backdrop of selective Iranian allowances for Chinese vessels, U.S. diplomatic
pressure, and mutual economic dependencies. Trump described Xi’s offers
positively, while official readouts from the US side highlighted talks/consensus
on the reopening of the SOH. Also, deeper structural issues—China’s leverage in
critical minerals, allegations of potential Iran arms supply discussions, and
Iran’s hardline stance—raise questions about the summit’s real impact on the
reopening of the SOH.
Full Text of China’s
President Xi’s Statements—Xinhua—China's Official Readout of Xi-Trump Meeting
On the morning of May 14,
President Xi Jinping held talks with U.S. President Donald J. Trump, who is on
a state visit to China, at the Great Hall of the People in Beijing.
“President Xi noted that a transformation not
seen in a century is accelerating across the globe, and the international
situation is fluid and turbulent. Can China and the United States overcome
the Thucydides Trap and create a new paradigm of major-country relations?
Can we meet global challenges together and provide greater stability for the
world? Can we build a bright future together for our bilateral relations in the
interest of the well-being of the two peoples and the future of humanity? These
are the questions vital to history, to the world, and to the people. They are
the questions of our times that the leaders of major countries need to answer
together. I stand ready to work together with President Trump to set the course
and steer the giant ship of China-U.S. relations to make 2026 a historic,
landmark year that opens up a new chapter in China-U.S. relations.
President Xi stressed
that China is committed to a steady, sound, and sustainable development of
China-U.S. relations. I have agreed with President Trump on a new vision of
building a constructive China-U.S. relationship of strategic stability. This
will provide strategic guidance for China-U.S. relations over the next three
years and beyond and will be well received by the people of both countries and
the international community. “Constructive strategic stability” means positive
stability with cooperation as the mainstay, healthy stability with competition
within proper limits, constant stability with manageable differences, and
lasting stability with expectable peace. Building a constructive China-U.S.
relationship of strategic stability is not a slogan. It means actions in the
same direction.
President Xi noted that
China-U.S. economic and trade ties are mutually beneficial and win-win in
nature. Where disagreements and frictions exist, equal-footed consultation is
the only right choice. Yesterday, our economic and trade teams produced generally
balanced and positive outcomes. This is good news for the people of the two
countries and the world. The two sides should jointly sustain the good momentum
that we have worked hard to create. China will only open its door wider.
U.S. businesses are deeply involved in China’s reform and opening up. China
welcomes more mutually beneficial cooperation from the U.S.
President Xi pointed out
that the two sides should implement the important common understandings we have
reached and make better use of communication channels in the political,
diplomatic, and military-to-military fields. The two countries should expand
exchanges and cooperation in areas such as the economy and trade, health,
agriculture, tourism, people-to-people ties, and law enforcement.
President Xi stressed
that the Taiwan question is the most important issue in China-U.S. relations.
If it is handled properly, the bilateral relationship will enjoy overall
stability. Otherwise, the two countries will have clashes and even conflicts,
putting the entire relationship in great jeopardy. “Taiwan independence” and
cross-Strait peace are as irreconcilable as fire and water. Safeguarding
peace and stability across the Taiwan Strait is the biggest common denominator
between China and the U.S. The U.S. side must exercise extra caution in
handling the Taiwan question.”
“President Trump said that it was a great honor to
pay a state visit to China. The United States and China have a very good
relationship. President Xi and I have had the longest and greatest relationship
that the presidents of the two countries have ever had. We have enjoyed
friendly communication and worked out many important issues. President Xi is a
great leader, and China is a great country. I have tremendous respect for
President Xi and the Chinese people. Our meeting today is the biggest summit
the world is watching. I will work together with President Xi to strengthen
communication and cooperation, properly handle differences, make bilateral
relations better than ever before, and embrace a fantastic future. The United
States and China are the most important and most powerful countries in the
world. Together, we can do a lot of big and good things for the two countries
and the world. I have brought with me the best representatives of American
businesses. They all respect and value China. I strongly encourage them to
expand their cooperation with China.”
The two presidents
exchanged views on major international and regional issues, such as the Middle
East situation, the Ukraine crisis, and the Korean Peninsula. The two
presidents agreed to support each other in hosting a successful APEC Economic
Leaders’ Meeting and G20 Summit this year. During the meeting, President Trump
asked each of the business leaders who were traveling with him to present
themselves to President Xi.
Highlights of major
public comments of Trump, Xi, and other officials
sTrrump:
o Xi said China won’t send
military gear to Iran and wants to see Hormuz reopened.
o
He said he’s not going to give military
equipment… He said that strongly—he'd like to see the Hormuz Strait open—and
said, 'If I can be of any help whatsoever, I would like to help.'
o
China was not fighting a war with the United
States, but Xi raised Beijing’s oil purchases from Iran.
o They buy a lot of their oil there, and they’d
like to keep doing that.
o
Anybody who buys that much oil has obviously
got some kind of relationship with them. He’d like to see the Hormuz Strait
open.
o Xi would like to see a deal made.
o He did offer; he said, ‘If I can be of any
help at all, I would like to be of help.
o Xi probably can influence Iran.
o The Iranian leaders we are dealing with are reasonable, but they should
make a deal, as I would not be much more patient.
o I discussed Iran with Chinese President Xi
Jinping and how they do not want Iran to have nuclear weapons and want the
straits open.
o We’ve settled a lot of different problems that
other people wouldn’t have been able to solve.
o Trump with Xi: We
did discuss Iran. We feel very similar. We want the straits open. We’re closing
it now. They closed it, and we closed it on top of them—but we want the straits
open.
Will Xi ignore Trump again on Iran's nuclear issue?
· Trump: I told Xi you don’t need Iran to have a
nuclear weapon.
· Reporter: What did he say?
· Trump: He’s not going to respond too much.
· Reporter: Do you think he agreed?
· Trump: I think he did.
The WH: Trump said his Chinese counterpart, Xi Jinping, agrees:
·
The Strait of Hormuz must
remain open to support the free flow of energy.
·
Building on progress in
ending the flow of fentanyl precursor chemicals into the US
·
Increasing Chinese
purchases of US agricultural products
·
Both countries agreed
that Iran can never have a nuclear weapon.
Chinese Foreign
Ministry: The two heads of state exchanged views on
major international and regional issues, including the situation in the Middle
East, the Ukraine crisis, and the Korean Peninsula.
v Chinese President Xi
Jinping told US President Trump ahead of their bilateral talks in Beijing:
o I always believed that the common interests between China and the US
outweigh their differences.
o Cooperation benefits both sides, while confrontation harms both.
o China wants 2026 to be a landmark year in the countries’ relations.
o This year marks the 250th anniversary of the founding of the
United States. I extend my congratulations to you and to the American people.
o I firmly believe the common interests between China and the United States
are bigger than our differences.
o Cooperation benefits both sides, while confrontation harms both.
o The two countries should be partners rather than rivals, achieve success together, pursue common prosperity, and chart a correct path for major-country relations in the new era
Trump to the Chinese president: "You're a great leader." Sometimes people don’t like me saying it, but I say it anyway, because it’s true.
The US Senator Marco Rubio said the following:
· President Trump raised Iran in talks with
Chinese leader Xi Jinping, but he didn’t ask him for anything.
· We’re not asking for China’s help. We don’t
need their help.
· China
agreed with the US that Iran should not have a nuclear weapon and brought that
up in their meetings.
· The Chinese told the US team in meetings that they
are not in favor of militarizing the Straits of Hormuz, and they’re not in
favor of a tolling system.
· It’s good that we have an alliance or at least
an agreement on that point.
· China has ships in the Gulf, one of which was
struck by Iran over the weekend.
· I’m sure Iran didn’t do it deliberately, but
they did it; it happened—and so that’s why these Chinese ships are stuck in
there.
· Iran’s behavior is a huge source of
instability. It threatens to destabilize Asia more than any other part of the
world because it’s heavily reliant on the straits for energy.
· China has an economic interest in getting
shipping to flow through the Strait of Hormuz again, as if other countries are
struggling, they are going to be buying less Chinese products, and the Chinese
exports are going to drop precipitously—so it’s in their interest to resolve
this.
· We hope to convince them to play a more active
role in getting Iran to walk away from what they're doing now and trying to do
now in the Persian Gulf.
The US Treasury Secretary, Scott Bessent, said:
· The reopening of the Strait of Hormuz is in
China’s best interests, and it believes Beijing will do what it can to reopen
the waterway.
· I think they’re going to do what they can—China,
it’s very much in their interest to get the Strait reopened.
· And I think they will be working behind the
scenes to the extent anyone has any say over the Iranian leadership.
The US Trade
Representative Greer said China made clear during
President Donald Trump’s summit in Beijing that it wants the Strait of Hormuz
reopened without restrictions.
·
China needs to have the
Strait of Hormuz open, no tolling, and no military control, and that was clear
from the meeting—so we welcome that.
·
We believe Beijing will
act pragmatically regarding Iran.
·
They want to see peace in
that area. President Trump wants to see peace in that area. So we have a lot of
confidence that they will do what they can to limit any kind of material
support for Iran.
Overall, in brief, the Trump admin is now almost desperate for China’s
intervention to convince Iran to make a deal with the US as per Trump’s terms
& conditions, which is equivalent to surrender. Trump & Co. believes
the US has the leverage of the SOH closure, which pressures China to convince
Iran for a deal in favor of the US—something that Iran and even China are not
willing to do.
China officially urges
a quick ceasefire and renewed dialogue on Iran. China’s foreign ministry said
Friday:
·
China called for a
“comprehensive and lasting ceasefire” in the Iran conflict and urged all sides
to reopen diplomatic channels as soon as possible.
·
Finding a solution
earlier is beneficial to the United States and Iran, as well as regional
countries.
·
We should reopen the
channel as soon as possible.
China says Xi-Trump
summit brings ‘much-needed stability and certainty.’
China’s Ministry of Foreign Affairs has described Trump’s state visit to
Beijing as a landmark moment in the bilateral relationship, saying the leaders
had reached “a series of new common understandings." In a statement
published on X, the ministry said Xi and Trump had agreed on a new vision of
building “a constructive China-US relationship of strategic stability” that
would guide relations “over the next three years and beyond." The ministry
said interactions between the two presidents had “enhanced mutual
understanding, deepened mutual trust, and advanced practical cooperation,”
adding that the summit had “injected much-needed stability and certainty into
the world." Both sides also agreed to strengthen communication and
coordination on international and regional issues and to handle mutual concerns
“in a proper manner," the ministry said.
On May 15, after the
conclusion of Trump’s visit, China’s Foreign Ministry laid out Beijing’s
position on the “Iran situation” in a post on social media:
·
The conflict in Iran
“should not have happened in the first place” and has inflicted severe losses
on the people of Iran and other regional countries.
·
The spillover effects are
putting a heavy strain on global economic growth, supply chains, international
trade, and the stability of global energy supplies.
·
The recent US-Iran
ceasefire is welcomed, but momentum must be maintained: “Now that the door of
dialogue has been opened, it should not be shut again."
·
Dialogue and negotiation
are “the right way forward," and the use of force is “a dead end."
· Gulf shipping lanes must
be reopened “as soon as possible” to keep global supply chains stable.
·
A comprehensive and
lasting ceasefire must be reached at the earliest possible date to allow peace
and stability to return to the Middle East and Gulf region.
·
China and Pakistan have jointly issued a five-point
initiative for restoring peace and stability in the region.
·
China will continue to act in line with President
Xi Jinping’s four propositions on Middle East peace and also play “a
constructive role in achieving lasting peace.”
China’s Incentives
and Leverage: China may not be in a hurry to pressure Iran to make a deal with
Trump at gunpoint.
China may have compelling reasons to support reopening. As the largest
buyer of Iranian oil, Beijing suffers from disrupted flows (?) and higher
global energy prices. However, its dependence on Iran for oil creates a
balancing act. Trump acknowledged that Xi wanted to continue buying Iranian oil
(along with US oil) while committing not to provide military gear.
Although Iran sells almost 90-95% of its oil to only China, it’s
equivalent to only around 4-5% of China’s oil imports. China has a diversified
source of oil imports, including US oil. Thus, China will try to project itself as the
‘savior of the world’ and a responsible superpower by resolving the SOH closure
and Iran war mess of Trump, whose every action is making China more
self-reliant and the number one superpower by 2050, surpassing the US in terms
of economy, technology, and military—in the biggest geopolitical shift of
the 20th century. Also, the presence of top U.S. CEOs (Apple,
Nvidia, Tesla, Boeing, BlackRock, etc.) signaled the economic stakes but also
highlighted how corporate interests influence U.S. diplomacy & policy.
Although both China and the US are dependent on each other in development
& prosperity, China is more deleveraged than the US in terms of diversified
market access, along with the Rare Earth Materials (REMs) dominance—the lifeline
of the US military and tech strength. China is also the biggest market for most
of the US MNCs outside the US and a vital source of raw materials/supply chains.
Both the White House and the Chinese Foreign Ministry released readouts
emphasizing convergence on the Strait of Hormuz. The White House stated that
Trump and Xi “agreed that the Strait of Hormuz must remain open to support the
free flow of energy.” Trump publicly noted that Xi offered help, saying, “If
I can be of any help at all, I would like to be of help,” and pledged that
China would not supply military equipment to Iran.
China’s readout was
broader, framing the relationship under a new guiding
concept of a “constructive China-U.S. relationship of strategic stability.” Xi
stressed partnership over rivalry and highlighted 2026 as a potential landmark
year, coinciding with the U.S. 250th anniversary. Discussions also
covered the Middle East, Ukraine, and the Korean Peninsula from a broader
geopolitical aspect. There was no single word about Iran or the Strait of
Hormuz in China’s official readout.
But considering Trump’s comments (Xi offered all help to resolve his Iran
war mess and the SOH reopening) in his interview at face value, China (Xi)
may be waiting for an official request from both Iran and the US to ‘take care
of the nuclear dust'—paving the way for the reopening of the SOH and a peace
deal between the US and Iran.
Secretary of State Marco Rubio and Treasury Secretary Bessent reinforced
the message that reopening the strait aligns with China’s interests as a major
importer of Gulf & Iran oil. Rubio noted China’s economic stake: prolonged
closure would hurt global demand for Chinese exports. Bessent added that
Beijing would likely work “behind the scenes” with Iranian leadership.
Current Status of the
Strait of Hormuz (SOH)
As of May 15, 2026, the strait is not fully reopened. Iran has allowed
limited transit for some Chinese vessels following understandings on management
protocols, but full commercial traffic remains restricted due to mines,
security risks, insurance issues, and naval tensions. The U.S. has initiated
“Project Freedom” to guide stranded ships, with mine-clearing operations
underway. Overall, it may not be possible to reopen the SOH at least before
early June 2026, meaningfully amid mounting global oil supply pressures. Over
800 ships and tens of thousands of crew members have been affected, with high
economic costs. Energy prices remain elevated, underscoring the urgency. Indian
PM Modi has already pressed the SOH panic button.
Challenges and
Countervailing Factors
Several obstacles
remain:
·
Iran’s Position: Senior
IRGC figures have insisted on U.S. confidence-building measures and acceptance
of Tehran’s terms before full talks or reopening. Iran has used selective
access (favoring Chinese ships) as leverage.
·
Arms Allegations: NBC
News and The New York Times reported that Chinese state-controlled companies
discussed potential secret arms sales to Iran via third countries. While
unconfirmed as actual deliveries, the timing—surfacing around the summit—adds
skepticism to China’s non-military commitments.
·
Taiwan and Strategic
Tensions: The Chinese readout prominently warned against mishandling Taiwan,
contrasting with the narrower U.S. focus on energy and trade.
·
U.S. Options: Trump is
not expected to take dramatic steps during the China trip but may act
afterward, potentially resuming escalated “Project Freedom” operations or other
measures in coordination with Israel.
Xi Jinping invoked
the ancient Greek concept of the Thucydides Trap, the idea that when a reigning power meets a rising power, it tends to end
in conflict. Xi has spoken in the past about the West waning and China rising,
and there is a warning embedded in that framing: Taiwan could lead to
confrontation between China and the US if they cannot find common ground.
When President Xi very elegantly referred to the United States as perhaps
being a declining nation, he was referring to the tremendous damage we suffered
during the four years of Sleepy Joe Biden and the Biden Administration, and on
that score, he was 100% correct. Our Country suffered immeasurably with open
borders, high taxes, transgenderism for everybody, men in women’s sports, DEI,
horrible trade deals, rampant crime, and so much more!
On May 15, Trump
posted on his Truth Social:
“President Xi was not
referring to the incredible rise that the United States has displayed to the
world during the 16 spectacular months of the Trump Administration, which
includes all-time high stock markets and 401Ks’s, military victory and thriving
relationships in Venezuela, the military decimation of Iran (to be continued!) —
Strongest military on earth by far; economic powerhouse again, with a record 18
trillion dollars being invested into the United States by others; best U.S. job
market in history, with more people working in the United States right now than
ever before; ending country-destroying DEI; and so many other things that it
would be impossible to readily list. In fact, President Xi congratulated me on
so many tremendous successes in such a short period of time.
Two years ago, we were,
in fact, a Nation in decline. On that, I fully agree with President Xi. But
now, the United States is the hottest Nation anywhere in the world, and
hopefully our relationship with China will be stronger and better than ever
before!
Conclusions
Both China and Iran may not be in a hurry to reopen the SOH with terms & conditions (T&C) in favor of the US (Under Trump). On the other side, Trump is now desperate for an immediate face-saving exit from his Iran war mess ahead of the Nov. '26 midterm election, which he is set to lose badly in any way. Despite another laughable assassination attempt on his life recently, Trump’s popularity is steadily declining due to his chaotic policies and the now soaring cost of living as a result of surging gasoline (oil) prices due to the lingering double blockade of the SOH and Iran wars.
The question now is whether
Iran will transfer its highly enriched uranium to China—or any third country
(like Russia)—and sign a peace MOU with the Trump administration remains
unanswered as of May 12, 2026. While Iran has floated a compromise involving
partial down-blending and third-country transfer (with China as a leading
candidate), significant gaps persist on verification, guarantees, enrichment
rights, and facility status.
China’s potential role as custodian offers a pragmatic bridge, leveraging Beijing’s relationships with both parties. Success in the forthcoming Trump-Xi summit could prove decisive, providing the diplomatic momentum needed to close gaps. Yet, deep-seated mistrust, maximalist red lines, and domestic political pressures on all sides suggest that any agreement will likely be imperfect and phased rather than comprehensive.
Trump is demanding a 20-year nuclear enrichment ban for Iran, while Iran is offering 5 years. Although Iran and the US may agree on a 10-year nuclear enrichment ban (middle ground), Iran
may not compromise with its missile programs and the SOH leverage. It will ensure joint ownership along with
Oman for the SOH toll tax system for the reconstruction effort. But Trump may
not be in a position to accept such concessions for Iran, as it may further
damage his political prospects ahead of the November '26 midterm election,
which Trump is set to lose badly.
Bottom line
The worst of the Iran war may be over, but the SOH double blockade is not,
and the overall uncertainty & fragility remain. Although Trump may not
launch an all-out Iran war again due to various reasons, he may launch another
surgical strike on Iran’s nuclear facilities in an effort to snatch out the
‘nuclear dust’ and declare a unilateral ‘victory’ ahead of the midterm election (Nov '26) ─ if the SOH blockade is not over by July-August '26 and China does not
interfere actively. Trump got his trade deal with China with greater access to
the Chinese market for US MNCs, and thus his perceived notion of SOH
leverage over China may already be over. Trump is now trying to use it to
reopen the SOH with the active help of China, but China may not be in a hurry,
considering its protocol-based diplomacy and long-term strategic interest. Both
Trump and Iran first need to agree on the transfer of the so-called nuclear
dust to China, and then China may respond officially.
Technical
outlook: Oil
Looking
ahead, whatever may be the narrative, technically oil ($103) now has to sustain over 105 for a
further rally to 112/118-122*-128-130/150 in the coming days; otherwise sustaining
below 104.50, oil may fall again to 98/97-94/87 and further 84/80 and
75/70-60/55-50 in the coming days─ in line with the SOH reopening
Disclaimer:
• I have no position or plan to have any position in the above-mentioned financial instruments/assets within the next 72 hours.
• I am an NSE-certified Level-2 market professional (Financial Analyst—Fundamental + Technical) and not a SEBI/SEC-registered investment advisor. The article is purely educational and not a proxy for any trading/investment signal/advice.
• Please always consult with your personal financial advisor and do your own due diligence before any investment/trading in the capital market.
• I am a professional analyst, signal provider, and content writer with over ten years of experience.
• All views expressed in the blog are strictly personal and may not align with any organization with which I may be associated.
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