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Tensions between the U.S. and China over the Iran war and President Donald Trump’s decision to impose a naval blockade on the Strait of Hormuz have been on the rise this week and are worth keeping an eye on ahead of a key mid-May summit meeting that’s already been postponed once.
U.S. Treasury Secretary Scott Bessent said on Tuesday that China had been an unreliable global partner during the Middle East war by hoarding oil supplies and limiting exports of certain goods, such as rare-earth minerals, Reuters reported. Bessent compared China’s behavior to the country’s hoarding of medical supplies during the pandemic. Bessent told reporters he had spoken with Chinese officials about the issue, the report said, and dodged a question about whether the dispute would derail Trump’s planned to visit Beijing. He reiterated that Trump and Chinese President Xi Jinping had a very good working relationship.
Meanwhile, China on Tuesday criticized the U.S. blockade of Iranian ports as “dangerous and irresponsible,” the South China Morning Post reported. Foreign ministry spokesman Guo Jiakun told reporters at a daily briefing in Beijing on Tuesday that the U.S. action would only “inflame tensions, escalate the situation and undermine an already fragile ceasefire”, and that would further jeopardize the safety of navigation in the strait, the report said.
Trump on Sunday threatened to impose a 50% tariff on China, after a news report said Beijing was preparing to deliver a shipment of air defense systems to Iran.
Nervousness over China’s potential response to the blockade got some blame for weakness in soybean futures Monday and Tuesday, though they’ve largely held their recent range. Traders are looking toward the meeting, which was originally set for late April-early May, for affirmation Beijing will stick to what the Trump administration has said is a commitment to buy 25 million metric tons of soybeans a year following the completion of 12 million MT of purchases earlier this year.
The U.S. blockade is widely seen in part as an effort to pressure China to intervene in the Hormuz crisis given its consumption of Iranian crude. But Helima Croft, head of commodity strategy at RBC Capital Markets, argued in a Sunday note that it was unclear how deeply China wants to wade into the war at this stage, given that it had built up large strategic energy reserves ahead of the conflict. Beijing may also be “realizing some strategic gains by having the U.S. redirect military assets away from Asia towards the Middle East,” she wrote.
China soy imports lag expectations: China’s soybean imports were up 14.9% in March year over year, but remained well below analyst expectations, Reuters reported, dragged down by delayed shipments out of Brazil due to tougher inspections. Total imports were 4.02 million metric tons, up from 3.5 million a year earlier, data from the General Administration of Customs showed on Tuesday. One analyst noted the nearly 15% year-over-year boost was aided by a low base, due to last year’s volumes suffering as crushers shied away from U.S. soybeans and Brazil’s harvest faced delays.
Lost momentum: Farm-state Republicans are worried that a push for another round of economic aid for farmers is clashing with the political realities in Washington, Politico reported, citing people familiar with the negotiations.
The report said the Republican lawmakers are struggling to generate political will or find a vehicle for another package as Congress returns from a two-week break with a long to-do list that doesn’t include more money for farmers that industry groups have requested. Senators were looking to provide another $15 billion to $17 billion, with a carveout for specialty crop producers, the report said, with a plan to include that money in a disaster or military supplemental that the White House has weighed, though President Donald Trump has given his blessing for Republicans to pursue a party-line reconciliation package focused narrowly on immigration enforcement.
More talks?: U.S. stocks extended a rally on Tuesday, with the S&P 500 nearing a return to record territory on optimism over the prospect for further U.S.-Iran talks to end the war.
The US and Iran are looking to arrange a second round of peace talks in the coming days, Bloomberg reported. The goal is to hold more discussions before an April 7 ceasefire expires next week, the report said, citing people familiar with the matter. One proposal centers on a return to Pakistan, where initial negotiations were held last weekend, though other venues are being considered. Trump said talks could resume “over the next two days” in Pakistan, the New York Post reported.
Demand destruction: The largest oil supply disruption in history has sparked an almost immediate drop in demand that’s nearly unprecedented in its speed and severity, the International Energy Agency said in its monthly report Wednesday.
The report said:
- Oil demand is expected to contract by 80 kb/d this year, as the Iran war upends our global outlook. This is 730 kb/d less than in last month’s Report and a forecast 1.5 mb/d 2Q26 decline would be the sharpest since Covid-19 slashed fuel consumption. Initially, the deepest cuts in oil use have come in the Middle East and Asia Pacific, mainly for naphtha, LPG and jet fuel. However, demand destruction will spread as scarcity and higher prices persist.
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