TOPSHOT - US President Donald Trump (L) and China's President Xi Jinping shake hands as they leave after their talks at the Gimhae Air Base on October 30, 2025. (Photo by ANDREW CABALLERO-REYNOLDS / AFP via Getty Images)
AFP via Getty Images
The US-Iran ceasefire is unraveling forty-eight hours before Donald Trump's plane lifts off for Beijing, and the consequences are running straight through energy markets and into the agenda of his meeting with Xi Jinping. Trump said on Monday the truce was on "massive life support" after rejecting Tehran's response to his peace proposal as a "piece of garbage." Brent crude closed near $104 a barrel. The Strait of Hormuz, the chokepoint for roughly a fifth of the world's oil and liquefied natural gas before the war, remains largely sealed for the tenth straight week.
Trump arrives in Beijing on Wednesday for talks scheduled Thursday and Friday, his first visit to China since 2017. The official agenda runs across Iran, Taiwan, AI, nuclear weapons, trade and a possible extension of the critical-minerals truce. What looked, until a few days ago, like a trade meeting with a security backdrop has turned into a crisis-management summit. The Iran file is no longer a regional issue. It now sits at the center of what gets negotiated in Beijing.
The mechanics are straightforward. With Hormuz disrupted, global oil markets are losing roughly 100 million barrels a week, by Saudi Aramco's count. War-risk premiums on vessels approaching the strait are punitive. Insurance brokers are quoting Asian refiners on the assumption the waterway stays closed. Tehran has now added Ghadir-class midget submarines to a deterrent stack already built on drones, fast-attack craft and shore-launched missiles. The subs are small, noisy, and capable of carrying Chinese-designed C-704 anti-ship missiles. The threat does not need to be technically lethal to be commercially decisive. It only needs to keep shipowners and underwriters in their offices.
That sets up an awkward sequence for the White House. Trump's public line is that he is under no pressure. The market is telling a different story. WTI is back near $98. Treasury yields are climbing as inflation hedges rebuild. The administration is now openly considering a federal gas tax pause, the kind of measure governments reach for when they have run out of supply-side tools. American voters see gasoline prices before they see anything else.
That is the leverage problem. If Trump arrives in Beijing needing Chinese help to keep tankers moving, he arrives lighter than he wanted to be. China is the largest single buyer of Iranian oil and the closest thing Tehran has to a financial backstop. Xi does not have to make Iran behave. He only has to be the person Trump asks. The same point is now being made on the China-watcher circuit and inside the British think-tank consensus: an unfinished Iran war hands Beijing the better hand. The price for that help is unlikely to be paid in goodwill. It is more likely to be paid in concessions on AI export controls, on the critical-minerals truce, and on the political signaling around Taiwan, where the administration is already breaking with longstanding practice by openly saying Taiwanese arms shipments are on the summit table.
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This is the deeper boardroom point. The Iran story and the Trump-Xi story are now one story. Hormuz risk feeds American inflation. American inflation weakens the president's negotiating hand. Beijing is positioned to ease both, but only on terms that loosen the perimeter Washington has built around China's access to chips and rare-earth supply chains.
The composition of the US delegation tells you which industries are most exposed. Elon Musk, Tim Cook and Boeing's Kelly Ortberg are traveling with the president. Jensen Huang is not. Nvidia, whose chief executive has put its Chinese addressable market at around $50 billion, is being kept off the plane. That is consistent with a White House that wants commercial deliverables out of the trip but is not yet ready to trade AI chip controls for short-term oil relief. If Hormuz stays shut and crude moves higher, that calculation gets harder to hold.
For the energy industry, three things are worth tracking this week. The first is whether Trump revives the plan he floated on Fox News to escort ships through the strait, which would shift the conflict from a maritime stalemate to a direct US-Iran naval confrontation and push oil sharply higher. The second is Lebanon. Tehran has tied any ceasefire to an end to Israel's war on Hezbollah, and Israeli strikes have not stopped. That is the structural fragility inside the truce. The third is whether Xi quietly nudges Iran toward a face-saving climb-down, since Beijing's own interest is in stable oil flows and a Belt and Road corridor that does not run through a live war zone. China gains more from being seen to fix this than from letting it burn.
The most likely outcome in Beijing is not a breakthrough. It is what markets are already pricing: a fragile stalemate in which oil settles in the $80s, headlines suggest progress, and Washington quietly trades technology controls or Taiwan posture for an implicit Chinese promise on Hormuz. That would let the administration claim a win in time for the midterms. It would also be the first real test of whether American economic and technological leverage still buys what it used to.
Three months ago this was a trade meeting with energy in the background. This week it is an energy meeting with trade in the background.
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