Wang Yi outlines 3 priorities as Iran-US truce reshapes Middle East

China's Foreign Minister Wang Yi called on Pakistan to help consolidate the Iran-US ceasefire and restore Strait of Hormuz navigation, as crude prices retreated on the return of tanker traffic through the chokepoint that handles about 21% of global oil trade.

"All parties must work together to firmly support the negotiations and push them forward without interference," Wang said during a June 24 phone call with Pakistani Deputy Prime Minister and Foreign Minister Ishaq Dar, according to a Chinese foreign ministry statement.

The Strait of Hormuz reopened to commercial vessels in mid-June after the US and Iran signed a memorandum of understanding that paused hostilities and granted a 60-day waiver on oil sanctions. Crude futures eased as tanker traffic resumed, unwinding a portion of the risk premium that had built up since the conflict escalated. The waterway connects Persian Gulf producers — including Saudi Arabia, Iraq, the UAE and Kuwait — to global markets.

The ceasefire remains fragile. Any collapse would renew supply disruption fears and push oil prices higher, reigniting energy inflation just as central banks weigh the next phase of monetary policy. Wang's call with Dar signals Beijing's push to lock in the diplomatic gains before the 60-day sanctions waiver expires.

Wang identified three priorities for the next phase. First, consolidate the full ceasefire and prevent a return to hostilities, warning that "the situation must absolutely not reignite." Second, restore normal navigation through the Strait of Hormuz to stabilize global supply chains, with arrangements that respect both coastal state sovereignty and international norms. Third, support Middle Eastern countries in improving relations and exploring a new regional security architecture, arguing the Gulf "can no longer become an arena for great-power competition or a geopolitical sacrifice."

The Chinese foreign minister reiterated that the core of the Middle East problem remains the Palestinian issue, calling on regional countries to form a more unified position on the Two-State solution. The statement did not specify whether China plans to mediate directly between Iran and the US.

Historical Context

The last major disruption to Strait of Hormuz traffic occurred in 2019, when attacks on tankers and Saudi oil facilities temporarily removed about 5% of global supply and sent Brent crude above $75 a barrel. The current reopening mirrors the 2015 Iran nuclear deal period, when sanctions relief brought Iranian exports back to about 2.5 million barrels per day before the US withdrawal in 2018 collapsed the arrangement.

Market Implications

The reopening has already taken pressure off crude benchmarks. Brent crude has declined from its conflict peak as the risk of a full blockade receded. Shipping costs through the Gulf have also normalized, with war risk insurance premiums for vessels transiting the Strait falling. Defense sector stocks, which rallied during the conflict, have given back some gains as the probability of a prolonged confrontation diminished.

The 60-day timeline creates a clear deadline. If the truce holds and sanctions relief is extended, Iranian oil could return to export markets in meaningful volumes, adding to global supply at a time when OPEC+ is already debating production quotas. If it collapses, the Strait could close again within hours, sending oil prices sharply higher and testing central bank resolve on rate cuts.

This article is for informational purposes only and does not constitute investment advice.