Trump, Xi Discuss Hormuz Tensions

U.S. President Donald Trump stated on May 16 that Chinese President Xi Jinping agreed Iran must reopen the Strait of Hormuz, following their discussions in Beijing.

This development occurred as Trump considered lifting U.S. sanctions on Chinese oil companies that purchase Iranian oil, with China being the largest buyer of Iranian crude.

China's foreign ministry, however, did not confirm Xi's specific commitment regarding the Strait, instead issuing a statement that the ongoing conflict "should never have happened, has no reason to continue."

The Strait of Hormuz, a critical maritime chokepoint for one-fifth of global oil and liquefied natural gas supply, has been effectively closed by Iran since February 28, following U.S. and Israeli attacks.

This closure has led to a significant oil supply crisis, causing oil prices to rise. Iranian officials, including Ebrahim Azizi, head of the parliament's national security committee, indicated that Tehran is preparing a mechanism to manage traffic through the strait, which would involve fees and benefit only commercial vessels cooperating with Iran.

The U.S. had paused its attacks last month but initiated a port blockade.

Iran, which conducted retaliatory strikes against Israel, U.S. bases, and Gulf states, maintains it will not unblock the strait until the U.S.

ends its blockade. Trump has threatened to resume attacks if Iran does not agree to a deal.

Oil prices increased by approximately 3% to around $109 a barrel on May 15 due to concerns over the lack of progress in resolving the conflict, while U.S. Treasury yields reached a one-year high.