Trump repeats war threats against Iran ahead of meeting with Xi Jinping

US President Donald Trump repeated his military threats against Iran ahead of a visit to China, the Islamic Republic’s largest oil customer and a key diplomatic partner.

Iran will either “make a good deal” with the US or face devastation, Trump said on Tuesday. The war on Iran, which has sent energy prices soaring because of Tehran’s effective closure of the Strait of Hormuz, will be high on the agenda of the talks between Trump and Chinese President Xi Jinping.

“Number one, we’re going to have a long talk about it,” Trump said before his trip. “I think you’re going to see that good things are going to happen.”

The war will likely constrain Trump’s hand in discussions with China over trade, and his administration’s called on Beijing to help get Iran to reopen the strait.

A ceasefire between the US and Iran has lasted over a month but is fragile, with Trump describing it this week as being on “massive life support.”

Tehran continues to resist US demands to reopen Hormuz and says it will only do that if Washington ends a naval blockade on Iranian ports. It’s also insisting that the US unfreezes billions of dollars of Iranian assets and lifts sanctions. Iran’s stance comes despite signs that oil shipments from Kharg Island, its main export terminal, may be coming to a standstill because of the blockade, a development that would add to pressure on the economy.

For all that the US-Israeli bombardment until the ceasefire battered Iran’s military, it seemingly still have plenty of firepower. New US intelligence assessments show Iran has operational access to 30 of its 33 missile sites along the Hormuz strait and has retained roughly 70% of its prewar missile stockpile, according to a New York Times report citing classified information.

“The US and Iran remain too far apart for a deal,” wrote Bloomberg Economics’ Dina Esfandiary and Becca Wasser. “If neither side is willing to make concessions, then a lasting peace deal will remain elusive, sporadic increases in intensity and protracted war the most likely scenario.”

Oil prices dropped on Wednesday by roughly 1%, with Brent trading at slightly above $107 a barrel. They’re still up more than 5% this week.

The impact on the energy market of the closure of the strait, which normally handles one fifth of world’s supplies of oil and liquefied natural gas, is deepening. On Wednesday, the International Energy Agency said oil inventories are falling at a record pace and will continue to drop for months.

US lawmakers on Tuesday pressed Pentagon chiefs for details on the mounting costs of the war. Defense Secretary Pete Hegseth declined to give a breakdown as he faced questions in Congress during a hearing on the administration’s unprecedented $1.5 trillion defense spending request for next year. Jules Hurst, the Pentagon’s acting comptroller, said the war’s estimated price tag has risen closer to $29 billion. That’s up from a $25 billion estimate that had been cricized by some US lawmakers as unrealistically low.