Key Takeaways
- Iran’s Revolutionary Guard (IRGC) has warned it will halt all imports and exports in the Persian Gulf and Sea of Oman if the US naval blockade of Iranian ports continues.
- President Donald Trump revealed a personal letter from Chinese President Xi Jinping, stating that Xi has pledged not to provide weapons to Iran.
- Spot gold prices fell over 1% to $4,791.66/oz as investors reacted to hints of a diplomatic "end result" regarding the conflict.
- European nations are reportedly drafting a plan to clear the Strait of Hormuz independently of the US, seeking to restore trade without involving "belligerent" parties.
- US Treasury Secretary Scott Bessent defended the conflict’s economic costs, arguing that preventing a nuclear strike on a city like London is worth the hit to global GDP.
President Donald Trump signaled a potential shift in the ongoing Middle East conflict on Wednesday, revealing that Chinese President Xi Jinping has personally committed to withholding weapons from Iran. The disclosure came as Trump predicted that oil prices—which have been volatile since the start of the 2026 Iran war—will soon drop back to or below previous levels. Trump emphasized that the current energy market fluctuations would not derail high-level negotiations between Washington and Beijing.
The diplomatic optimism contrasts sharply with escalating threats from Tehran. Iran’s Revolutionary Guards issued a stark warning that they will stop all shipments to and from the Gulf if the US military continues its blockade of Iranian vessels in the Strait of Hormuz. US Central Command (CENTCOM) confirmed on Tuesday that the blockade of Iranian ports is "fully implemented," effectively halting 90% of Iran's maritime economic trade.
Market reactions were immediate, with Spot Gold falling more than 1% to $4,791.66/oz as safe-haven demand eased on hopes of a resolution. Investors are closely monitoring the impact on energy-related assets like the United States Oil Fund (USO) and major producers such as ExxonMobil (XOM) and Chevron (CVX). Trump noted that regional partners, including Saudi Arabia, have not pushed back against the US blockade, further isolating the Iranian regime.
In a significant move for transatlantic relations, reports surfaced that Europe is planning to clear the Strait of Hormuz independently of the United States. Led by France and the United Kingdom, the proposed coalition intends to deploy minesweepers and frigates to secure the waterway for global trade. French President Emmanuel Macron described the mission as an "international defense" effort that would exclude direct participants in the war, such as the US and Israel.
Domestically, US Treasury Secretary Scott Bessent addressed the economic fallout of the war in an interview with the BBC. Bessent dismissed concerns over short-term GDP downgrades, asking rhetorically what the cost to the global economy would be if a nuclear weapon were to hit a major financial hub like London. He asserted that the administration's priority remains long-term security over immediate market stability, even as the IMF warns of a potential global recession if the Hormuz blockade persists.
Meanwhile, the Chinese Foreign Ministry has moved to distance itself from the conflict, denying reports that Iran utilized a Chinese satellite for military operations. As rumors of a second round of peace talks in Pakistan circulate, Trump maintained that an "end result" regarding Iran may come soon. However, the IRGC’s threat to close the Gulf entirely suggests that the path to a ceasefire remains fraught with significant maritime risks.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.