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

There is little clarity about the terms of the ceasefire. Neither Washington nor Tehran refers to it as a formal agreement, and the absence of guarantees, enforcement mechanisms or an effective mediator underscores how fragile it may be.

President Donald Trump has declared victory, Tehran has described the outcome as a “historic achievement,” and Israeli Prime Minister Benjamin Netanyahu has offered only partial support for the arrangement.

The complexity of the war, including the involvement of Arab states across the Persian Gulf and multiple proxy actors, makes a comprehensive settlement difficult for now.

The view from Washington

The United States entered the war with multiple objectives: degrading Iran’s nuclear program, weakening the “Axis of Resistance,” and in some quarters even raising the possibility of regime change. At its core, however, the goal was to alter the regional balance of power by weakening Iran’s ability to threaten Israel and its neighbors.

According to American officials, roughly 13,000 targets were struck during the campaign, including missile infrastructure, naval facilities and parts of Iran’s air-defense network. Much of Iran’s military command structure was also disrupted following the killing of several senior figures.

From Washington’s perspective, these developments bought time by setting back Iran’s military capabilities and limiting its ability to rebuild quickly, even if sanctions were lifted.

However, key US objectives remain unresolved. Iran’s stockpile of highly enriched uranium has not been secured, and parts of the missile program retain operational capacity.

At the same time, Washington may have underestimated the leverage Tehran could exert through the Strait of Hormuz. Iran’s move to close the strait triggered a sharp global energy shock, prompting intense pressure on the Trump administration. These dynamics likely contributed to Washington’s decision to shift unresolved issues to negotiations.

In that sense, the United States neither fully won nor clearly lost. It altered the strategic equation but did not achieve all of its objectives on its own terms.

The view from Tehran

The internal condition of the Islamic Republic remains difficult to assess because of extensive internet restrictions. However, Tehran’s acceptance of the ceasefire suggests that the damage inflicted across military and infrastructure sectors was substantial.

The war also produced a dramatic transformation in Iran’s command structure following the killing of several senior figures, including Supreme Leader Ali Khamenei.

The collapse of much of Iran’s air-defense network exposed the political center of power to continued vulnerability, making the possibility of further strikes a persistent concern.

At the same time, Iran’s leadership faced a different strategic risk: internal instability. Disruptions to electricity and fuel infrastructure, combined with the fragile legitimacy of the new leadership, raised concerns about potential unrest in a society already marked by repeated protest movements.

Hardline figures publicly criticized the ceasefire on Wednesday night, accusing the government of retreating under pressure. Yet the leadership appears to have concluded that a temporary pause was necessary to stabilize the domestic situation.

Tehran also believes it has gained leverage through the closure of the Strait of Hormuz. Reports have emerged that Iran seeks transit fees of roughly $2 million per ship. If such a system were implemented across normal shipping volumes—a major assumption—it could theoretically generate tens of billions of dollars annually.

A fragile truce

Shortly after the announcement, parliamentary speaker Mohammad Bagher Ghalibaf—who now leads Iran’s negotiating team—said that three provisions of the ceasefire framework had already been violated: Israeli attacks on Lebanon, Iran’s enrichment rights, and the incursion of a hostile drone into Iranian airspace.

Complicating matters further is the structure of the mediation effort itself. Pakistan, as a non-Arab Muslim state with working relations with both Washington and Tehran, appears a logical intermediary.

But Islamabad’s influence appears limited. Netanyahu’s rejection of Prime Minister Shehbaz Sharif’s remark that the ceasefire included Lebanon was a telling moment.

The absence of GCC powers and Lebanon also represents a structural weakness of the negotiations, as these actors remain deeply embedded in the conflict.

However, the decisive issue in the coming talks is likely to be the nuclear question. The central contradiction between Washington’s demand for zero enrichment and Tehran’s insistence on maintaining enrichment rights appears difficult to bridge. The fate of Iran’s existing uranium stockpile remains equally uncertain.

The Lebanese front presents another potential flashpoint. For Tehran, any perceived abandonment of Hezbollah would signal the collapse of the Axis of Resistance. Recent rhetoric from Iranian officials about defending Lebanese Shiite communities indicates that this front retains the capacity to derail the ceasefire.

The ceasefire therefore represents neither the end of the conflict nor the beginning of a durable peace. It is more accurately a pause within an ongoing confrontation.

The war did not generate the decisive pressure necessary to impose a lasting settlement. Both sides now hope to translate battlefield outcomes into diplomatic leverage. But based on what is publicly known, the negotiations appear unlikely to deliver the decisive achievements either side seeks.

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.

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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.

Israeli strikes in recent days have hit Iran’s two main petrochemical hubs, Mahshahr and Assaluyeh, while US President Donald Trump has warned that further attacks on the country’s energy infrastructure could follow if no deal is reached by Tuesday night.

Iranian authorities said Monday that industrial facilities in the Mahshahr petrochemical zone are being evacuated ahead of Trump’s deadline.

On Saturday, April 4, Israeli forces targeted at least eight major petrochemical complexes in the Mahshahr region, along with critical supporting infrastructure, including power plants that supply electricity to the industrial zone.

Two days later, similar strikes hit the vast petrochemical facilities in Assaluyeh, the center of Iran’s South Pars gas and petrochemical operations.

Although the full extent of the damage remains unclear, Iranian officials have acknowledged that operations in both regions have been halted.

Mahshahr accounts for approximately 28 percent of Iran’s petrochemical production, while Assaluyeh contributes more than 48 percent. Together, the two hubs represent roughly three-quarters of the country’s total petrochemical output.

Iran’s petrochemical industry is the second-largest source of export revenue after crude oil. The country has a nominal production capacity of about 95 million tons per year, although actual output is closer to 75 million tons due to persistent shortages of electricity and natural gas.

Around half of this production—valued at approximately $13 billion annually—is exported, accounting for more than one-fifth of Iran’s non-oil exports.

The shutdown of these facilities therefore represents more than a temporary industrial setback. It directly threatens one of Iran’s most important sources of foreign currency earnings.

If the damaged infrastructure cannot be restored in the medium term, the second-largest producer of petrochemicals in the Middle East could even face shortages.

Over the past decades, Iran has invested an estimated $70 billion in developing petrochemical infrastructure. In the event of severe damage, rebuilding these facilities would pose a major financial and technical challenge.

Given the constraints imposed by sanctions, limited access to international capital and broader economic pressures, Iran is unlikely to have the resources required for rapid reconstruction.

Even if external financing were secured, restoring production capacity would take years, and possibly more than a decade.

Petrochemical plants are highly complex systems that depend not only on physical infrastructure but also on stable energy supply, advanced technology and efficient logistics networks—all of which are currently under strain in Iran.

The strikes on petrochemical facilities come alongside recent attacks on major steel plants in Isfahan and Khuzestan, which together account for roughly half of Iran’s steel output. Taken together, the pattern suggests a broader strategy aimed at weakening Iran’s industrial backbone rather than targeting isolated sectors.

The timing of these strikes is particularly significant given Iran’s pre-existing structural weaknesses.

In recent years, the country has faced chronic shortages of natural gas, electricity and refined fuels, forcing many industries to operate well below capacity. These constraints have already reduced industrial output and increased production costs.

At the same time, Iran’s logistics sector suffers from deep inefficiencies. According to World Bank data, the country ranks near the bottom in regional logistics performance, second only to Afghanistan. This limits Iran’s ability to reroute supply chains, manage disruptions or quickly recover from large-scale damage to infrastructure.

The combined effect of these factors could push Iran into a deeper economic crisis. A sustained disruption in petrochemical exports would significantly reduce foreign currency inflows, putting additional pressure on the national currency and exacerbating inflation.

Ultimately, the burden of this crisis will fall disproportionately on ordinary Iranians who are already struggling with high inflation, energy shortages and rising unemployment.

If Trump follows through on his threat, the conflict could move further into the economic domain, reshaping the trajectory of Iran’s economy and potentially sending shockwaves through regional—and even global—energy markets.