Why the Iran-US truce is more likely to buy time than peace

The truce that emerged after six weeks of war remains fragile, even as diplomatic signals from Washington, Tehran and Islamabad suggest the meeting is likely to go ahead.

Amid the uncertainties and the mistrust, it was perhaps unsurprising that Iran’s ambassador to China, Abdolreza Rahmani Fazli, publicly expressed hope that Beijing could act as a guarantor of the process. The suggestion followed reports that China maintained contact with both Washington and Tehran during the diplomatic push that helped produce the ceasefire.

Yet when asked directly about such a role, China’s foreign ministry avoided any commitment, saying only that Beijing hopes “all parties can properly resolve disputes through dialogue and negotiation” and will maintain communication with those involved.

This episode reflects a broader pattern in China’s response to the war: exerting influence while avoiding commitment.

Beijing is engaged, but only up to a point. It maintains economic ties with Iran, continues to purchase its oil, and provides forms of support that help sustain the Iranian economy under pressure. Yet none of this amounts to the kind of backing Tehran would need in an existential conflict. There are no security guarantees, no military involvement, and no willingness to absorb significant strategic risks.

China’s limited readiness to intervene reflects both its capabilities and its priorities. Its actions are ultimately directed toward ensuring that the conflict does not disrupt its broader strategic agenda at minimal cost. Contributing to de-escalation can serve that objective, but only insofar as it advances clearly defined interests.

When the conflict began on February 28, Beijing was relatively well positioned to absorb the initial shock with the strategic reserves it had built up throughout 2025, the increasing electrification of its economy, and its vast domestic coal resources. It also soon became clear that Tehran could withstand the initial decapitation strikes.

At the same time, China’s regional strategy has increasingly shifted toward the monarchies across the Persian Gulf, reinforcing its preference for a balanced and non-committal posture.

The conflict also presents certain strategic opportunities. As the United States diverts military resources and political attention to the Middle East, pressure on China in the Indo-Pacific decreases. The war also offers insights into US military capabilities and operational patterns.

These advantages, however, depend on the conflict remaining limited. A prolonged war—such as the one that loomed when President Donald Trump warned that a “whole civilization will die”—poses significant risks.

China is poorly positioned to weather a global recession with ease. Exports remain essential for sustaining industrial output, growth and employment. A decline in external demand, combined with disruptions to key industrial and agricultural inputs, would therefore undermine a critical pillar of its economy.

Beijing wants stable relations with Washington, not least to buy time to strengthen its economy against future US pressure. In addition, the question of how to protect or evacuate the hundreds of thousands of Chinese nationals in the region would become increasingly urgent if the conflict escalated further.

It was under these conditions that China chose to act. On the one hand, it vetoed a Bahrain-sponsored resolution at the UN Security Council that—even in revised form—could have provided legal cover for further attacks against Iran. On the other, it helped create a diplomatic off-ramp to a US president in clear need of one.

China’s role in the crisis thus highlights both the reach and the limits of its influence. Beijing has demonstrated an ability to shape outcomes at critical junctures, but it remains unwilling to assume the responsibilities of a security provider. Its actions are highly context-dependent: had Washington shown no interest in de-escalation, or had diplomatic openings not emerged, China’s ability to intervene would likely have been far more limited.

The Chinese leadership, in other words, is not seeking to resolve the conflict as much as to manage its consequences. It intervenes not to build a lasting order, but to prevent outcomes that would damage its broader strategic agenda.

As long as that calculation holds, Beijing will remain an influential—but ultimately cautious and constrained—actor in Middle Eastern security.

The ceasefire announced on April 7 has offered temporary relief to the United States and, by extension, the global economy. Oil prices have since fallen below $100 per barrel, the Strait of Hormuz may finally reopen, and global stock markets have rallied, recovering part of the losses recorded over the previous 40 days.

The coming days may prove crucial for stabilizing seasonal supply chains, particularly for fertilizer inputs transiting the strait during the peak planting period in the Northern Hemisphere.

Inside Iran, however, the outlook is far more complex.

The war effectively froze Iran's economic crises, shuttered markets, and halted price discovery. A similar pattern followed the 12-day conflict earlier in the war, when markets closed temporarily before reopening to renewed upward pressure as underlying imbalances reasserted themselves. This time, the damage is far greater.

During US-Israeli airstrikes on Iran’s strategic infrastructure, attacks on Mahshahr and Asaluyeh petrochemical facilities hit sites Iranian officials say account for 85% of the country’s petrochemical export capacity.

The steel industry was also hit. Since these sectors supply downstream industries from plastics to automotive manufacturing and construction, the full scale of disruption has yet to be assessed.

The Tehran Stock Exchange has been closed for more than 40 consecutive days.

The head of the Securities and Exchange Organization has indicated that war-damaged companies will return to trading at a later stage, meaning that even if the exchange reopens, a significant portion of major firms may remain inactive.

Reopening without viable export-oriented companies could trigger heavy selling pressure in a market where banks and automakers are already loss-making and reliant on state support.

• 

  Dollar-pegged pizza in Tehran points to a different kind of regime change

Inflation remains the most pressing crisis. Before the US-Israeli airstrikes, annual inflation had surpassed 70 percent — the highest since World War II. Food inflation reached triple digits, with bread and grains rising by 140 percent and cooking oil by more than 200 percent.

The war temporarily suppressed these pressures: demand fell amid unemployment, banking disruptions reduced the velocity of money, and property and automobile transactions slowed sharply.

With the Pakistani-brokered ceasefire, that suppressed demand is likely to return.

The fiscal picture offers no relief. The approved budget included a 65-percent rise in taxes, but roughly 60 percent of working-age individuals are currently unemployed.

In effect, the government is attempting to tax its way out of a fiscal crisis in an economy where the majority of working-age adults have no income to tax. Post-war military expenditures and reconstruction obligations have increased sharply, with no significant new revenue streams available.

Compounding this is the disruption of Iran's primary financial channel through Dubai, which for years served as a central hub for trade and currency transactions worth $16 billion to $28 billion annually.

Following recent attacks on Dubai, Emirati authorities reportedly detained dozens of currency dealers linked to Iran's Revolutionary Guard and shut down associated front companies.

Alternative channels in Herat and Erbil remain active but lack Dubai's scale. When suppressed demand for foreign currency returns, it will hit a narrower, less efficient set of channels, amplifying exchange rate volatility.

The ceasefire offered the world a reprieve. For Iran, it removed the only thing suppressing a crisis that had been building for months. When markets reopen, they will price in not only pre-war imbalances but the destruction of the export capacity that once generated foreign currency.

The rial will face a market that has every reason to reprice it sharply downward, and a state with fewer tools than ever to intervene. Iran's economy has not returned to its pre-war condition. It has moved past it.

Yet the ceasefire itself is fragile, reportedly violated several times within its first 48 hours. Even in the best-case diplomatic scenario, the technology and capital required for reconstruction will not materialize within weeks, and as long as the risk of renewed conflict remains, investors are unlikely to commit long-term capital.

What comes next at the negotiating table will shape whether any of it matters.

For me, the question was not abstract. I came from a country where, for more than half a century, leaders had repeatedly threatened to weaponize the Strait. As an energy correspondent, I wanted to understand whether the region had built credible alternatives, or the world was still exposed to a risk it preferred to ignore.

Routing oil supplies away from the Strait of Hormuz has been a recurring topic in the Middle East, especially since the “tanker wars” of the 1980s. Regional governments had long been reviewing and funding contingency plans to deal with a possible closure of the Strait and to reroute their oil and petroleum exports.

Yet most of these plans never moved beyond paper, even after cabinet approvals. Those that did remained underfunded, and the volumes they could carry were a drop in the bucket compared to the total flow through the Strait of Hormuz.

Analysts I spoke to at the time believed such plans were not economically feasible in the absence of a real disruption. The reality was that regional countries were reluctant to commit billions of dollars to precautionary infrastructure that might never be needed.

And even if disruption did occur, many of them believed it would be short-lived — that the United States would intervene militarily and reopen the waterway quickly.

The alternative routes

As a result, projects remained limited in scope. Saudi Arabia’s East-West Pipeline carried oil to the Red Sea, but its capacity increases remained modest relative to the scale of Hormuz. The UAE’s Fujairah terminal bypassed the Strait, but remained geographically too close to be fully secure.

Other routes were even more constrained. The Iraq–Turkey pipeline faced political disputes between Baghdad and the Kurdish region over oil rights and territory. The Iraqi Pipeline through Saudi Arabia (IPSA), built by Saddam Hussein in 1989 to bypass Hormuz, has been largely inactive since 1990. Plans for a pipeline to Jordan’s Aqaba port depended on fragile Iraqi-Jordanian relations.

Deep-seated rivalries across the region prevented the implementation of most cross-border projects. The alternative plans were small, and governments were so reluctant to share information that I abandoned the article.

Two winners

Only two countries took the threat seriously.

China diversified its energy sources over the past decade and worked to reduce its dependence on the Strait of Hormuz.

The second was Iran, which built the Goreh–Jask pipeline to bypass the strait altogether, and also invested heavily in its ability to affect alternative routes.

Tehran repeatedly reminded regional countries that these alternative routes were vulnerable. The 2019 attacks on oil tankers near Fujairah, the 2019 drone strike on Saudi Arabia’s East-West pipeline, and the 2023 attacks by the Houthis on shipping lanes in the Red Sea were direct challenges to efforts to secure alternative export routes.

The US-Israeli war against Iran in March was a sobering reminder to the global economy that the world had long neglected one of its most critical chokepoints.
Iran managed to wipe out trillions of dollars from global markets by closing the Strait and added inflationary pressure to economies already under strain.

The price of securing the Strait was now much higher than the price of alternative projects would have been if they had been taken seriously.

Alternative routes were a partial answer at that time, but now they are no answer at all. During the US-Iran war, the region began to realize that a lasting solution lies not in infrastructure, but in a new regional security framework that limits the weaponization of the Strait of Hormuz.

By Wednesday morning, several senior figures were already positioning themselves as the architects of the truce, and their competition quickly spilled into the Iranian media.

The pro-government ISNA news agency reported that parliamentary Speaker Mohammad Bagher Ghalibaf would lead Iran’s delegation to the talks scheduled to begin Friday in Islamabad, Pakistan. Within half an hour, the IRGC-linked Tasnim News Agency contradicted the report, saying the composition of the delegation had not yet been finalized by the “relevant institutions.”

The conflicting reports highlighted uncertainty over who would lead the delegation and underscored the rivalries that often shape decision-making in Tehran.

The first official statement on the ceasefire came from Foreign Minister Abbas Araghchi, a longtime diplomat with close ties to Iran’s security establishment.

In a post on X, he emphasized that he was speaking “on behalf of the Supreme National Security Council of the Islamic Republic of Iran,” and thanked Pakistani officials “on behalf of the Islamic Republic of Iran,” language that appeared to project broad institutional authority.

President Massoud Pezeshkian, who cannot join the negotiating team for protocol reasons, issued a largely symbolic statement—seemingly intended to remind the public that the country still has a president expected to lead the government. Like several other officials who had advocated a ceasefire from the outset, Pezeshkian framed the temporary truce as a “victory for Iran.”

Moments after Iran signaled its reluctant acceptance of the ceasefire, Nasim Online, an outlet close to the IRGC, published a statement from the Secretariat of the Supreme National Security Council.

The statement suggested that Security Chief Mohammad Bagher Zolghadr was also seeking to frame the agreement as a decisive achievement. It declared that “the enemy… has suffered an undeniable, historic, and crushing defeat,” and repeatedly urged the public to “celebrate the victory.”

Yet within minutes of the statement, Israel and Jordan reported intercepting Iranian missiles. Later on Wednesday, Kuwait came under drone and missile attack. The incidents highlighted the fragile nature of the ceasefire and the difficulty of enforcing it across multiple actors involved in the conflict.

Israel’s heavy strikes on Beirut later that day further underscored the instability of the truce. US Vice President JD Vance publicly described the ceasefire as “fragile.”

In the early hours of Wednesday, Iranian-aligned groups in Iraq initially appeared unwilling to honor the ceasefire. But when they released a female US journalist they had taken hostage earlier in the week, the move suggested Tehran still retains influence over some allied militias and could signal a willingness to ease tensions.

From the tone of several officials in Tehran, particularly those aligned with more pragmatic political currents, it appears that many believe President Trump has concluded the conflict has reached its limit and that he does not want further escalation.

Tehran appears to share that assessment. Both sides have claimed victory, a framing some politicians describe as a “win-win agreement.”

The two-week ceasefire was announced after weeks of fighting that began on February 28 when the United States and Israel launched strikes on Iran while negotiations were still underway.

President Trump said on Wednesday that Washington would work closely with Iran following what he described as a “productive regime change,” adding there would be no uranium enrichment.

But messages from across Iran suggested the pause in fighting has stirred mixed and often painful reactions. Some described the truce as a missed opportunity for political change.

“We asked you for help to free Iran, but not only did you not free it, you handed us a much worse country and trampled the blood of 45,000 martyrs,” one citizen wrote in a message addressed to Trump, referring to protesters killed during past nationwide unrest.

Others expressed deep despair about the country’s future.

“When I heard the news of the ceasefire, it felt like the world collapsed on my head,” a resident of Tehran said.

“We were miserable and now we will become more miserable. We no longer have any hope,” another message said.

Despite the truce, a weeks-long internet blackout across Iran has persisted, limiting communication and access to outside information.

Some urged patience, however, suggesting the ceasefire could be part of a broader strategy.

“Trump knows what he is doing. If he intended to accept the conditions, he would not have entered the war at all. Perhaps more surprises will occur in the coming days,” one citizen wrote.

Another message called on Iranians not to lose hope.

“Do not be so hopeless. Regime change is possible. This ceasefire may be another surprise. You have the right to be tired, but you must remain patient,” a citizen from Kerman wrote in a message addressed to fellow Iranians.

Pakistan’s Prime Minister Shehbaz Sharif said on Wednesday that US and Iranian delegations would arrive in Pakistan on Friday for talks, raising the prospect that the ceasefire could open the way for negotiations.

Some also warned that the pause in fighting could allow the authorities to intensify domestic repression.

“With this ceasefire, the killing machine will be activated faster and more young people will be at risk,” one message said.

Iran has carried out executions during the war, raising fears among activists that the authorities may use the ceasefire period to tighten control.

Others reflected on the uncertainty surrounding the fragile truce.

“I feel like a patient whose surgeon, in the middle of surgery, says let us wait a bit and see if it heals on its own,” one citizen wrote.