China has entered the room

As expected, the workable list of points presented by Iran was immediately violated, in this case by Israel, who took the opportunity to bomb Lebanon, trying to eliminate Hezbollah. Iran has responded by closing again the strait of Hormuz, so we’re back to square one. But are we? Oil has not moved back to the prior highs, and US equity futures are slightly down. Is the market starting to adjust to the consequences of the conflict? Or is it because China is starting to intervene diplomatically? Perhaps it is the negotiator that both sides need. Big enough to not succumb to Trump tactics, respected (and feared) by Israel, and economically important to Iran, currently and in the future. Perhaps China knows now it’s a good moment to softly intervene in the conflict and convince the U.S. and Iran that there is a path forward. The problem is Israel surely will not accept any terms that don’t involve the inability of Iran to build nuclear weapons and the complete elimination of Iran’s proxies in the region. But this war might end in Beijing, not in Teheran or Washington.

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