The meeting

The US is awaiting Iran’s formal response to its latest proposal for an interim deal to extend the truce and move toward a final settlement. Iran says the proposal is still “under review” with no set deadline. Tehran prefers a phased approach: addressing regional conflicts, sanctions lifting, and Hormuz access before deeper nuclear concessions. In the meantime, Hormuz continues to be closed. It’s blocked by both the U.S. and Iran. As a consequence, oil is not flowing freely around the world and inventories are getting depleted rather quickly. The chart below helps to quantify the extend of the damage: if Hormuz continues to be closed by June 2026, global inventories will reach 7.6 billion barrels. At that level, refineries and pipelines become stressed. If no deal is reached by September, at 6.8Bn barrels, the world begins to stop: ques at the pump, flights cancelled, empty shelves at supermarkets. Higher prices for goods. Scarcity. And the price of oil doesn’t fix it. Does Iran know about this and is pushing the world on the brink? Is it just inevitable that the military conflict resumes and/or escalates? How do you fix that problem from the outside? Lowering rates doesn’t do it. Printing money doesn’t do it. Probably both measures will be used if no other alternative is available. The alternative solution to military escalation needs to be diplomatic. By coincidence, Trump will meet Xi this week in Beijing. Xi is probably the only one that can change the fate of this conflict. And it’s happening the way Chinese like it. Their biggest opponent, the U.S., comes to motherland (China) to ask for help in a conflict where they have been mere spectators, patiently waiting for this meeting to happen.

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