As of 6:00 a.m. ET, Thursday, May 14, 2026.

TL;DR

The White House confirmed this morning that President Trump and Chinese President Xi Jinping have agreed that "the Strait of Hormuz must remain open to support the free flow of energy." Xi also expressed interest in purchasing US crude oil, and both sides agreed Iran cannot acquire a nuclear weapon. The joint statement is the strongest US-China alignment on the Iran crisis since fighting began in late February, and it carries immediate implications for oil, energy futures, equities, and global inflation expectations.

What Happened

President Trump arrived in Beijing on Wednesday for a two-day summit with President Xi Jinping. A White House readout of the opening session, issued just after 5:30 a.m. ET Thursday, confirmed three key outcomes.

  • Joint Hormuz declaration. "The two sides agreed that the Strait of Hormuz must remain open to support the free flow of energy," the White House stated. Xi expressed opposition to the militarization of the strait or any toll imposed on its use.
  • Chinese oil purchases. Xi expressed interest in buying US crude oil, a potential shift that could reduce China's reliance on Iranian barrels and align Beijing's economic interests with a faster ceasefire.
  • Iran nuclear position. Both countries agreed that Iran cannot be permitted to acquire a nuclear weapon.

Xi told Trump that trade talks were "making progress," while warning that mishandling of the Taiwan issue could "send relations down a dangerous path." The summit continues through Friday.

The statement was confirmed independently within minutes by the New York Times, NBC News, Fox News, the Guardian, and the Times of India, all citing the White House readout.

Trump-Xi Hormuz Statement: Why Oil Markets Are on Watch

The Strait of Hormuz (the narrow passage between Iran and the Arabian Peninsula) has been effectively closed since the US-Israel military campaign against Iran began on February 28, 2026. The waterway normally handles roughly 20 percent of global oil supply and significant LNG (liquefied natural gas) volumes.

The supply shock to date has been severe. The IEA reported Wednesday that the conflict has removed a cumulative total exceeding 14 million barrels per day (bpd) from global markets, depleting inventories "at a record pace." The agency projects a supply deficit of 1.78 million bpd for all of 2026 if the disruption continues. OPEC production has fallen more than 9.7 million bpd, roughly 30 percent, since the conflict began.

Brent crude was trading at $106.36 per barrel and WTI at $101.29 as of 9:30 a.m. London time Thursday, before the joint statement was widely circulated.

Prior market reaction provides useful context. On March 23, when Trump first publicly hinted at ceasefire progress, Brent fell from roughly $114 to $102 per barrel within hours, a decline of approximately 11 percent. A verified Hormuz reopening could produce a comparable or larger move in the same direction.

The energy story also intersects directly with US inflation. April producer prices (PPI) came in at 6 percent year-over-year on Wednesday, the highest reading since December 2022, with energy costs as a primary driver. Core PPI ran at 5.2 percent annually. Lower energy prices resulting from a Hormuz reopening would be sharply deflationary and would materially change the Federal Reserve's rate outlook.

Implications by Asset Class

Oil and Energy Futures

This is the most directly exposed segment. Sustained diplomatic momentum toward a ceasefire or partial reopening would press Brent toward the $90-95 range, consistent with pre-war pricing. Traders holding long crude positions above $100 face the risk that the US-China alignment creates genuine leverage over Iran that was previously absent.

OPEC cut its 2026 demand growth forecast to approximately 1.2 million bpd on Wednesday, down from 1.4 million bpd, and OPEC production has fallen roughly 30 percent since the war began. The UAE formally exited OPEC on May 1, reducing cartel coordination. Natural gas and LNG markets are also in play given Hormuz's role in Gulf LNG export routes.

US Equities and Index Futures

The S&P 500 closed at a new all-time high of 7,444 on Wednesday. Lower energy prices are broadly positive for equities: they reduce production and transportation costs, ease inflation, and increase the probability of Federal Reserve rate cuts. Consumer discretionary, transportation, industrials, and manufacturing sectors stand to benefit the most. S&P 500 futures were pointing higher early Thursday.

Bitcoin and Crypto

Bitcoin was trading near $79,350 early Thursday, weighed by the hot PPI print. A Hormuz-driven oil decline would modestly reduce demand for Bitcoin as an inflation hedge in the short term. However, the CLARITY Act Senate committee markup vote at 10:30 a.m. ET is the dominant near-term catalyst for digital assets on Thursday. A positive vote there would likely dominate directional crypto price action regardless of the oil move.

Gold

Gold futures were near $4,689 per ounce as of Wednesday. Reduced geopolitical risk premium would apply modest downward pressure. But lower inflation expectations and potential rate cuts remain structurally supportive. The net effect for gold is likely mixed to modestly negative in the near term if ceasefire momentum gains credibility.

Potential Positives vs Negatives

Positives:

  • The US-China united front gives Iran a clear economic incentive to negotiate. China buys approximately 60 percent of its oil through the Hormuz corridor, and Xi's stated interest in US crude signals Beijing may be prepared to reduce its reliance on Iranian barrels.
  • A Hormuz reopening would cut energy prices globally, reduce inflation, ease pressure on consumers, and improve the case for central bank rate cuts in the US and Europe.
  • Lower energy costs would improve corporate margins broadly, supporting equities.
  • The joint agreement that Iran cannot acquire nuclear weapons signals rare strategic common ground between Washington and Beijing.

Negatives:

  • Iran has not yet responded. Tehran has historically rejected external pressure and may view the statement as a provocation rather than an invitation to negotiate.
  • A conditional ceasefire has been in place since April but has not produced meaningful commercial shipping through the strait. Markets may discount another diplomatic statement without verified action on the ground.
  • Xi's Taiwan warning introduces additional geopolitical uncertainty. If Taiwan tensions escalate alongside the Iran crisis, global risk sentiment could deteriorate sharply.
  • Even after a ceasefire, infrastructure damage and elevated regional insurance premiums will keep energy prices above pre-war levels for months.

What Could Happen from Here

Base case (45 to 55 percent probability): The joint statement creates sustained diplomatic pressure on Iran over the coming weeks. Ceasefire talks advance in phases. Brent gradually retreats toward $90-95 over 4-6 weeks as the market begins to price in a partial reopening. No large immediate oil move today; the statement is absorbed as constructive but markets wait for verified Iranian engagement before pricing in a full reopening.

Confirms: Iranian foreign ministry signals willingness to enter Phase 2 negotiations; US or UN envoys report progress; tanker insurance premiums begin to decline.
Invalidates: Iran publicly rejects the US-China framework or escalates tanker seizures in the Hormuz area.

Upside scenario for risk assets (20 to 30 percent probability): Iran uses the US-China pressure as political cover to announce a ceasefire extension and partial Hormuz reopening within 2-3 weeks. Brent falls 10 to 15 percent, US inflation expectations drop, the Federal Reserve signals a rate-cut path is reopening, and US equities extend their all-time high run. Bitcoin recovers after initial selling and tests the $83,000 resistance zone.

Confirms: Official Iranian announcement of Hormuz commercial access; resumption of tanker traffic; sharp oil futures sell-off.
Invalidates: IRGC announces additional mining operations or attack activity near the strait.

Downside scenario for risk assets (20 to 30 percent probability): Iran rejects the US-China framework, interprets it as escalatory, and responds with hardened restrictions or infrastructure attacks. Brent spikes above $110-115, equity volatility surges, and rate-cut expectations are pushed further out. The PPI-driven inflation story returns to the center of market attention.

Confirms: IRGC statements rejecting US-China terms; new tanker incidents in the Hormuz region within 24-48 hours.
Invalidates: Iran engages US or Chinese envoys in substantive Phase 2 talks within 48-72 hours of the White House statement.

What to Watch Next (Next 24 Hours)

  • Iran's response. An official reaction from Tehran's foreign ministry or the IRGC within the next 6-12 hours is the first real test of whether the joint declaration has traction on the ground.
  • Day 2 of the Trump-Xi summit (Friday). Additional joint statements on Iran ceasefire terms, trade deal details, and any Taiwan-related developments will shape the broader risk narrative through the weekend.
  • Oil price action Thursday. Brent's behavior in London and New York trading hours after the statement is fully digested will set the short-term direction for energy markets.
  • CLARITY Act Senate committee markup at 10:30 a.m. ET. A separate but significant catalyst; a committee passage would add to the broader risk-on tone and support equities and crypto.
  • US equity open. If oil pulls back and technology stays bid, the S&P 500 has a clear path to extend its Wednesday record close of 7,444.

Frequently Asked Questions

Why does the Strait of Hormuz matter so much to oil prices?
The strait is the world's most critical oil chokepoint. Roughly 20 million bpd of oil and condensate flowed through it before the conflict began, representing about 20 percent of global supply. There is no short-term alternative routing for the majority of Gulf oil production.

What would a Hormuz reopening mean for inflation?
Energy costs are a primary driver of the current US PPI reading of 6 percent. A verified reopening would lower fuel and transportation costs globally, reducing both headline and core inflation readings over the following 1-3 months, and would increase the probability of Federal Reserve rate cuts later in 2026.

Sources

For broader context on the Gulf supply shock, see earlier ChartDojo coverage: US Stocks and the Gulf Supply Shock and Oil Futures React to Iran Strike Escalation.

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