In a dramatic intervention aimed at preventing a full-scale regional war, China and Saudi Arabia have jointly called on former U.S. President Donald Trump and Iran to de-escalate hostilities and immediately reopen the strategically vital Strait of Hormuz. The urgent diplomatic push comes as Beijing intensifies its efforts to broker a ceasefire, with President Xi Jinping emphasizing that the crisis must be resolved through diplomacy, not military escalation. The Strait's closure by Iran, following the U.S. and Israel's military actions in February, coupled with the Trump administration's recent blockade of Iranian shipping, has triggered a severe supply shock, directly threatening global energy security and sparking immediate volatility across commodity and financial markets.

Xi chats with friend MBS about ways to keep Hormuz open

Xi’s call with the Saudi crown prince came after a meeting in Beijing last week with the crown prince of Abu Dhabi. In that meeting, Xi pushed for respect for international law. On Monday, he repeated that message to the Saudi leader. He said China backs countries in the Middle East in “taking their future and destiny into their own hands, and promoting long-term regional stability and peace.” He also said, “The Strait of Hormuz should remain open to normal passage, as this serves the common interests of regional countries and the international community.”

China’s foreign ministry followed with a harder line on the cargo ship incident. Spokesman Guo Jiakun said Beijing was concerned by what he called the “forced interception” of an Iranian-flagged vessel by the United States. He urged all sides to follow the ceasefire agreement in a responsible way. Guo told reporters, “The situation in the Strait of Hormuz is sensitive and complicated.” He added that parties should avoid more escalation and should “create the necessary conditions for normal transit through the strait to resume.”

The United States said earlier that it fired on and seized an Iranian cargo ship that tried to break its blockade of Iranian ports. Iran’s military said the vessel had come from China and promised retaliation. It called the incident “armed piracy by the U.S. military.” Beijing urged the parties to “continue the ceasefire and negotiations.” Guo said, “Now that a window for peace has opened, favorable conditions should be created to bring the war to an end as soon as possible.”

Markets reverse as oil shipments freeze and truce nears expiry

The shipping fight is hitting the oil supply and market mood. Kuwait has declared force majeure on oil shipments as Iran closes the Strait of Hormuz. Before the Iran war, Kuwait was producing 2.5 million barrels of oil per day. Analysts said “complacent” investors risk getting caught wrong-footed because they keep reading the war too softly. Hopes had jumped after the strait briefly reopened on Friday, but that mood did not last.

Stocks had rallied as traders bet the Gulf fight was cooling after a two-week ceasefire between the United States and Iran was agreed on April 7. Tehran’s Friday announcement that the strait was open to shipping pushed that move further. The S&P 500 rose 4.5% last week. The Nasdaq Composite jumped 6.8%, and Friday marked its 13th straight winning session, matching a run not seen since 1992. Then markets lost steam on Monday when traffic through the strait stopped again. Global equities turned lower, the ceasefire looked shaky, and strategists warned that investors may still be misreading how news from the Iran conflict is moving prices ahead of Tuesday’s ceasefire expiry.

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