Target Isn’t Just Iran - Trump Wants China To Submit Too
China, Ball Is In Your Court
You probably heard… US has a Navy blockade outside the Strait of Hormuz. Yes, Competing Blockades - which has not occurred since WWII and is an Act Of War by definition.
Well, it’s pretty tough for me to get a clear read from the news feed what is true and what is not on actual vessels/owners/cargo passing through since the US blockade set up outside the SOH, but we heard Wednesday that US Admiral Cooper said forces have “completely halted” Iranian sea trade and “no ships” transited from Iranian ports yesterday.
And yet… a few accounts I follow have proof of the opposite:
On the other side (receiving end) of this argument, the Chinese navy has clearly stated that it would respond severely and immediately if Chinese ships were hindered in their international shipping.
And why the tough talk from China?
The Merchant's News sums it up:
(US) Sanctions have gradually pushed Iran’s crude and condensate exports into a single outlet: China.
Independent analyses consistently estimate that roughly 90% of Iran’s oil exports now flow to Chinese refiners a figure US government reporting corroborates directly, noting that Chinese purchases provide tens of billions of dollars in annual revenue that sustain Tehran’s budget and underwrite its military spending.
As such,
US-sanctioned tanker, Chinese-owned Rich Starry, transited through the Strait of Hormuz on Tuesday despite a US blockade of the vital oil chokepoint, shipping data from LSEG showed.
And for added ‘security’, China passed laws to shore up its rights of sovereignty:
China introduced rules targeting “undue extraterritorial jurisdiction” by foreign governments, expanding its ability to assess and retaliate across trade, investment, and international cooperation. via FT
Then, in response no doubt, Bessent/the Treasury Department warned banks in Oman, UAE, Hong Kong and China that the US will impose secondary sanctions which would cut off those banks from the U.S. Financial System if they transact with Iran.
Bessent was so bold as to claim in an interview that “China will no longer be able to get oil from Iran”.
US Treasury Secretary Bessent said the blockade is believed to have halted Chinese purchases of Iranian oil, will not renew the Russian oil waiver, and stated that two Chinese banks received Treasury letters warning of potential secondary sanctions.
All the while, the US military presence in the Middle East is building and getting its “war footing” by reaching out to US auto manufacturers to become suppliers of munitions!
While markets are screaming higher to new all-time-highs, the Trump administration also revoked the Iranian Oil Waiver that will expire APR 19. This will take an additional estimated 140 million barrels offline, so they cannot reach global markets (i.e. China).
With that buildup, how high will physical oil prices go? We do not know:
HSBC CEO: “The highest I’ve seen, and I’m hoping we don’t see more of that, but the highest I’ve seen is $286 for a barrel of oil that reached Sri Lanka”
Back to China…
China will stop exporting sulfuric acid as of May 1st. This impacts fertilizers, batteries, semiconductors, pharmaceuticals and military weapons.
And, China had already decided to flex on Panama last month:
China Tells Maersk and MSC to Withdraw from Panama Canal Ports: FT
China has ordered A.P. Moller-Maersk and Mediterranean Shipping Company to immediately withdraw from operating Panama Canal ports Balboa and Cristóbal, according to people familiar, after they took over from CK Hutchison Holdings Ltd.
Then this week, China is getting ready to restrict solar panels to US?!
Let’s just say, I don’t think China is done flexing. And an estimated 1.4 billion-barrel oil hoard in reserves by China means they can likely outlast Trump before the mid-terms.
