Description: Energy markets temporarily stabilized, after US President Donald Trump stated that continued negotiations with Iran would resume in the next couple of days. After an expectedly fragile initial meeting in Islamabad, American and Iranian officials would reinstate peace talks under Pakistani mediation in spite of the competing blockades of the Strait of Hormuz. Open-source data has indicated that despite threats from Trump and counterthreats from Iran, more than eight ships transited the Strait on 13 Apr. Chinese president Xi Jinping, while meeting with UAE’s Mohamed bin Zayed al Nahyan in Beijing, emphasized the importance of the opportunity that should be seized by the warring parties while cautioning against further escalation, since the war has already rippled economically through Asian countries. Iran’s nuclear ambitions remained a major sticking point after the Islamabad Talks, a concession which Iran is unlikely to abandon after repeated US and Israeli attacks during previous negotiations.
Impact: Continued negotiations are aimed at securing an extension to the existing ceasefire, which expires on 22 Apr, since both countries based their negotiating positions on polarizing conditions and demands. No significant progress is expected from the second round of talks aside from public wartime posturing and escalating public narratives from both the US and Iran. The second round of talks would also likely position US and Iranian officials for continued diplomatic engagement considering the global economic effects of the war. China’s revived engagement in the war, both through Pakistan and consistent public narrative of deescalation arrives at a crucial time for Asia’s energy crisis and as Beijing starts to consolidate its oil reserves as a result of the wartime uncertainty.