Summary

Two Straits, One Bill: Washington And Beijing Are Paying For The Same Blockade – OpEd Key Takeaways: - The author says Monday’s two Hormuz transits (vs. ~125 a day before Feb. 28) and 48 Bab al-Mandeb commodity ships last weekend show the U.S. and China still share the same oil-and-freight pipes even as they split on chips and AI; Ghalibaf ties a Hormuz reopening to Tehran’s terms, a senior Iranian official floated a week if Washington eases pressure, Brent closed at $97.69, and Lloyd’s said escorts would still cap flows under 10% of normal. - Houthi control of Yemen’s Red Sea coast and Perim Island, Trump’s refusal to strike them at MBS’s request, Saudi loadings down from 7.5 to ~2.1 million b/d, and an East–West pipeline only just restarted after a Sept. 13 drone hit are tied to China’s Q2 crude imports at 8.1 million b/d (−32%) and U.S. August inflation of 3.4% (gasoline +27.4%, diesel over $6, Fed hike to 3.75–4%). Shanghai–West Coast spots are up 129% since late February. - August Chinese exports to the U.S. still rose 34.4%; soybean buys are halfway to 25 million tonnes, and rare-earth controls lapse Nov. 10. The proposed summit bargain: Xi lean on Tehran to reopen Hormuz in return for extending that truce—keep tech on a decoupling list, keep fuel, food, and ships on a shared one. On Monday, two commercial vessels passed through the Strait of Hormuz. Before the war began on February 28, about 125 made the crossing every day. At the other end of the Arabian Peninsula, 48 commodity vessels crossed the Bab al-Mandeb over the weekend, down from 57 the weekend before. Xi Jinping lands in Washington this week for a summit with Donald Trump. Both men will arrive with economies being taxed by the same two stretches of water, and neither government controls either one. A decade of American strategy has assumed that the US and Chinese economies can be pried apart, sector by sector, until Chinese distress stops being an American problem. For semiconductors and frontier AI, that separation is policy, and it is defensible. For oil, grain and the ordinary goods that fill container ships, the past seven months have shown something else. The two economies are tied to the same infrastructure. When it breaks, they fail together. Look at who decides whether that infrastructure works. Iran’s parliament speaker, Mohammad Bagher Ghalibaf, has warned that Hormuz stays blocked until Tehran’s demands are met. On Tuesday, a senior Iranian official said the strait could reopen within a week if Washington eased military pressure and lifted its blockade of Iranian ports. Brent crude fell to $97.69 a barrel on that remark alone, its first close below $100 since September 9. Two tankers were attacked in the strait that same day. Even under naval escort, Lloyd’s List calculated, transits would be capped below 10 percent of normal volumes. The Red Sea exit is now held by a militia. In a few days this month the Houthis took Yemen’s entire Red Sea coast, six districts covering 5,400 square kilometres, and seized Mayun (Perim) Island at the mouth of the strait. At talks in Muscat, Houthi representatives told American officials their restrictions would apply only to Saudi-linked vessels. Trump twice turned down Mohammed bin Salman’s requests to strike them. The effect on Riyadh has been severe. Saudi crude loadings fell from 7.5 million barrels a day in January and February to about 2.1 million by mid-September. The East-West pipeline, the kingdom’s route around Hormuz, was shut by a drone attack on September 13 and restarted only on Tuesday, at reduced capacity. China takes 22 percent of Saudi crude. Roughly half of its oil imports come from the Middle East, and more than 90 percent arrive by sea. The US Energy Information Administration found that Chinese crude imports averaged 8.1 million barrels a day in the second quarter, 32 percent below the first. In May and June they fell below 8 million for the first time since 2016. Beijing’s strategic reserves cushioned the blow, but they cannot replace a trade route. Americans are paying at the pump and at the bank. Headline inflation reached 3.4 percent in August. Gasoline was up 27.4 percent from a year earlier and accounted for more than a third of the monthly rise. US diesel has topped $6 a gallon. On September 16 the Federal Reserve raised rates to a range of 3.75 to 4 percent, its first increase in three years. Shipping costs added to the strain: Lloyd’s List reported that spot rates from Shanghai to the US West Coast had risen 129 percent from late-February levels, and much of that increase came from fuel. Advocates of decoupling have one strong counterpoint, and the piece should face it. If the two economies were really tied together, tariffs would have loosened the tie by now. They haven’t. In August, Chinese exports to the United States rose 34.4 percent to $42.5 billion, and China’s global surplus reached $119.1 billion. Four years of tariffs moved some of the supply chain, but the goods still reach America, on ships that pay the same war-risk premiums and bunker prices as everyone else. Tariffs changed where the goods come from. The ships, and the risks at sea, stayed the same. The trade relationship built since May is small, but it works as a buffer. Beijing agreed to buy 25 million tonnes of American soybeans a year and by mid-September had passed the halfway mark, although its buying of other crops has been selective. A bigger deadline follows the summit. China’s suspension of rare-earth export controls expires on November 10. If the truce breaks down, American manufacturers would face a magnet and metals shortage on top of an energy shock. Chinese factories would lose a US market that is still absorbing their output while their fuel bills climb. That is two supply shocks at once, and the Fed has just shown how little room it has left. The summit agenda already includes Chinese purchases of Iranian oil. Washington treats them as grounds for punishment. They are also leverage. Beijing is Tehran’s largest customer, and a Hormuz that stays shut costs China more than it costs the United States, which exports oil. A commitment from Xi to press Tehran on reopening the strait, in return for an extension of the truce and the rare-earth suspension past November, would do more for American gasoline prices than another tariff schedule. It would also test whether Beijing will spend influence to protect a trade route it depends on. None of this touches export controls on advanced chips, and it shouldn’t. The case is for keeping two lists: one for technology, where separation is deliberate, and one for fuel, food and freight, where it isn’t possible. Trump and Xi will spend this week discussing Taiwan, AI and soybeans. Meanwhile, a speaker in Tehran and a militia on Perim Island decide how much both countries pay for fuel. The leaders can compete over the first list and still agree to protect the second. Like what you read? Please consider supporting Eurasia Review. Thank you for your consideration!