A few days ago, I suggested there were only two ways to stop the Houthis from attacking ships in the Red Sea.
One solution to the problem entails convincing Benjamin Netanyahu to call a ceasefire in Gaza. If that happens, it won’t likely be due to external pressure, but rather to domestic discord, although it’s an election year in the US and some key constituents in Joe Biden’s coalition are furious over the civilian death toll in the war.
Another solution involves issuing an ultimatum to Tehran. So far, the US has stopped short of that, preferring instead to strike its proxies in Yemen and Iraq.
Apparently, there’s a third option: Xi Jinping could intervene. According to sources cited by Reuters, Beijing has, in recent days, exhorted Tehran to “rein in” the Houthis’ activities in crucial shipping lanes or risk undermining Iran’s business relationship with China.
One Iranian official with knowledge of the meetings summed up China’s message: “If our interests are harmed in any way, it will impact our business with Tehran. So tell the Houthis to show restraint’.”
China uses the sea routes in question just like everyone else, and Tehran plainly values its business relationship with Beijing. China’s the largest importer of Iranian oil, and shipments have ramped up amid looser sanctions enforcement prior to the onset of full-on war between Hamas and Israel in October.
Iranian flows were “running at about two million barrels a day, close to the country’s capacity,” just weeks before Hamas’s attacks on Israel, according to sources familiar. As Bloomberg noted in September, additional volumes “are almost all going to China.”
Kpler data suggested China bought Iranian oil (technically contraband) at the fastest pace in a decade over the summer.
The figures showed China took some 1.5 million barrels per day from Iran in August, more than 50% higher than the first seven months of the year, and the most in Kpler data that begins in 2013. China’s refiners accounted for around nine in 10 barrels of Iranian oil exports in 2023.
That’s what leverage looks like, although Beijing surely wouldn’t describe the situation in coercive terms given China’s geostrategic relationship with the theocracy in Tehran.
In their coverage, Reuters said China hasn’t made “any specific comments or threats about how Beijing’s trading relationship with Iran could be affected if its interests were damaged by Houthi attacks,” but Xi’s envoys were “clear” on at least one thing: The emperor “would be very disappointed with Tehran if any vessels linked to China were hit.”
On Friday, Wang Wenbin, one of the Party functionaries markets hear from regularly, said China remains “concerned” about the Red Sea. Beijing, Wang went on, “urge[s] the cessation of attacks and harassment against civilian ships.” He also snuck in a thinly-veiled jab at the US. All parties, he said, should “stop fueling the tensions.”
Earlier this month, Zhang Jun, Xi’s UN envoy, said the Houthis should “cease their attacks” on civilian ships “immediately” out of “respect” for “the freedom of navigation.”
Remember: Xi’s actively seeking to expand China’s influence in the Mideast. Last year, he brokered a tentative diplomatic truce between the Saudis and Iran.
Whether Tehran values its “business” relationship with China more than the regional “causes” to which it’s blood-committed is an open question, particularly when the regime knows Xi will ultimately get over it. After all, Iran and China share a common enemy: America.
The last point is a very good point.
If the Iranians are admitting to what China is openly acknowledging, any ships suspected of carrying Iranian goods or entering or leaving Iranian ports could be considered part of the Houthi cause much as the Houthis consider all shipping to be related to Israel.
Would be good to include an analysis on the China-Europe railway express since the attacks began. It is clear this conflict contains some strategic upsides for China. Also the Houthi’s have already promised to leave Chinese vessels alone.
You keep your central thesis, as if Israel has any true value to Iran, other than provoking the US, to which they call “the big devil” (as opposed to Israel which is called “the small devil”). But Israel has no true value for Iran, except as a political stress against the so called “west”, in their bigger religious quest. BTW, I’ll appreciate if you don’t block me from further commenting your reply, this time. Thanks.
Just wanted to add: If you really want to understand Iran, you should chat with Iranians through social media, like I do. Amazing revelations.
As long as you are speaking with people who live there rather than disgruntled, bitter emigrees. That applies to any nationality be it Eastern Europeans, Cubans etc. A mistake US intelligence agencies made in years gone by.
If you are, indeed, speaking with onshore Iranians, have you seen any drop in their generally favorable view of the US?
Tanker hit and on fire, unclear how serious. Nowcast 1Q US GDP +3%. I think oil should respond to both the Middle East, the trend of positive US economic data, maybe even China stimulus hopes. Stubbornly holding on to positions.
Fire out of control, tanker crew evacuated. Will be interesting to see if oil traders yawn at this.