Here's the latest
• Ceasefire takes strain: Some aides of President Donald Trump said he is now more seriously considering a resumption of major combat operations in Iran. Trump said the truce is on “life support” after he rejected Iran’s counterproposal to end hostilities, which he said did not address nuclear issues.
• Trump’s China trip: Sources said a major decision on how to proceed is unlikely to be made before Trump’s departure to China today. An adviser to Iran’s supreme leader warned Trump he should not mistake the current lack of fighting as a victory as he heads to Beijing.
• Oil crisis: The oil market won’t return to normal this year if the Strait of Hormuz doesn’t reopen soon, a Saudi oil giant warned. The US released 53.3 million barrels of oil from the Strategic Petroleum Reserve to loan energy firms, as part of a global effort to stabilize oil prices.
Oil prices rise, stocks fall as Trump weighs a return to fighting
Oil prices are climbing and stock markets retreating after US President Donald Trump said the ceasefire with Iran was on “life support,” with some aides saying he was considering a possible resumption of major combat operations.
Brent crude, the global oil benchmark, ticked up 2.5% to $106.8 a barrel. WTI, the US benchmark, rose 3% to $101 a barrel.
Trump called Iran’s latest counterproposal to end the war “a piece of garbage.” Tehran’s terms reportedly include sanctions relief and the recognition of its sovereignty over the Strait of Hormuz, ordinarily a conduit for around a fifth of the world’s oil and natural gas supply.
If the reopening of the strait is delayed by a few more weeks, the oil market won’t return to normal until next year, Saudi Aramco, the world’s top oil exporter, warned yesterday. “Markets are also pricing rising chances of lasting disruption,” with Brent futures for oil deliveries in six months’ time rising 2.5% to $89.5 a barrel yesterday, according to Deutsche Bank analysts.
Meanwhile, equity markets are under pressure this morning. S&P 500 and Nasdaq futures point to a weaker open, after notching fresh records yesterday. Dow futures are flat. Major indexes in London, Paris and Frankfurt traded lower by around 0.5-1%, “as fears of re-escalation resurface, deepening inflationary worries,” according to Neil Wilson, a strategist at Saxo bank.
In Asia, South Korea’s KOSPI index led declines, with Deutsche Bank analysts ascribing the 2.3% drop to comments by a senior official who floated the idea of a “citizen dividend” on excess profits linked to artificial intelligence.
Japan’s Calbee chip bags go monochrome as Iran war bites
If you’re shopping for your favorite Calbee chips in Japan and see that familiar bag in black and white – it’s not a printing mistake.
The Japanese snack maker said on Tuesday it will temporarily change the packaging to grayscale and ditch its typically bright and eye-catching colors in stores nationwide because of supply chain disruptions from the Iran war.
The move comes in response to “supply instability affecting certain raw materials amid ongoing tensions in the Middle East,” the company said in a statement.
The new packaging will apply to 14 products from May 25 and won’t affect product quality, Calbee said.
The stripped-down packaging might mean shoppers need to rely more on the words on the packets, rather than the colors, when quickly grabbing their favorite flavors from supermarket shelves. Usually, regular Calbee consumers would know that the red bag is for lightly salted potato chips, while the yellow packets with green labels are for seaweed flavor fans.
The company didn’t specify exactly which shortages had prompted the change. But a spokesperson from the Japanese government said it had “received no reports of immediate supply issues regarding printing ink or naphtha, and we recognize that the necessary volume for Japan as a whole is being secured.”
Naphtha is a petroleum byproduct sometimes used in parts of the ink manufacturing process.
Former national security adviser says he expects full-scale military action to resume in Iran
H.R. McMaster, former national security adviser during President Donald Trump’s first term, predicts the military campaign against Iran will restart and says, “I think the regime is making another huge mistake, they’re driving past another off-ramp.”
Israeli airstrike kills six in southern Lebanon, state media reports
An Israeli airstrike on a house in southern Lebanon killed six people and wounded seven, Lebanon’s National News Agency reported on Tuesday.
The attack took place on Monday night in the town of Kfardounine. The injured were taken to hospitals in the city of Tyre.
Israel and Hezbollah, the Iranian-backed paramilitary group, have continued to exchange fire, which have intensified in recent days, despite a ceasefire deal between the Lebanese and Israeli governments. The truce was intended to pave the way for peace talks. Israel and the militant group have repeatedly accused one another of violating the agreement.
The cumulative toll from Israeli attacks since March 2 stood at 2,869 killed and 8,730 wounded, according to the Lebanese Health Ministry.
US releases 53 million barrels of oil from Strategic Petroleum Reserve
The US Department of Energy announced the release of 53.3 million barrels of oil from the Strategic Petroleum Reserve (SPR) on Monday to loan energy firms, part of a global effort to stabilise oil prices following the US-Israeli war with Iran.
The latest release is part of a larger US commitment to add 172 million barrels to the global market. That pledge, announced in March as part of an International Energy Agency (IEA) initiative involving more than 30 countries, aimed to add approximately 400 million barrels of oil to the global market.
Iran’s closure of the Strait of Hormuz, a vital waterway which carried 20% of the world’s oil and natural gas supply prior to the conflict, has raised oil prices and caused inflationary pressure across the global economy. Crude prices are up around 45%, or some $30 a barrel, since the war started.
To date, approximately 35 million barrels have been delivered to the market from the SPR, according to the energy department.
The US SPR is the world’s largest supply of emergency crude oil. The reserve has been maintained by the federal government since 1975 to help protect the US economy from major disruptions in petroleum supply.
While some producers, including Saudi Arabia and the United Arab Emirates, have found alternative routes for their exports, around 10-12 million barrels of crude remain choked off from global markets per day, according to analysts.
World oil consumption was around 103 million barrels per day last year based on preliminary estimates from the US Energy Information Administration.
Trump heads to China today as Iran ceasefire teeters on the brink. Here's what to know
US President Donald Trump said the ceasefire with Iran is on “life support” after he rejected Tehran’s counter-proposal to the US plan to end the war.
Some Trump aides said he is now more seriously considering a resumption of major combat operations in Iran. Tehran’s top negotiator, meanwhile, said his country is “prepared for every option.”
Trump heads to China later today, where Iran will be one of many talking points in his high-stakes summit with leader Xi Jinping. China has long been a close ally of Iran and is the main importer of Iranian oil.
A major decision on Iran is unlikely to be made before Trump’s departure to China, according to sources.
Here’s what to know about negotiations:
- Nuclear sticking point: Trump accused Iran of reneging on an agreement to allow the US to remove its supply of enriched uranium. Trump said Iran told the administration that it would give up its enriched uranium but that the US would have to remove it. He added that China was the other country the Iranians said was capable of retrieving the uranium. Iran didn’t mention nuclear weapons in their counterproposal, he said.
- Trump’s view: The president said there are “moderates” and “lunatics” in dealing with Iran, and the “moderates are dying to make a deal.”
- Iran’s view: Iran’s foreign ministry said its proposal, which state media reported included recognition of its sovereignty over the Strait of Hormuz, was “reasonable.” An advisor to Iran’s supreme leader warned that Trump should not mistake the current lack of fighting between the US and Iran as a victory as he heads to Beijing.
The deadlock again delays the reopening of the Strait of Hormuz, an oil trade chokepoint crucial to global energy supplies.
Here’s the latest on the economic crisis:
- Oil crisis: The oil market won’t return to normal this year if the strait doesn’t reopen soon, a Saudi oil giant warned. Even if it were to reopen now, Saudi Aramco warns it would “still take months for the market to rebalance,” CEO Amin Nasser told analysts on a conference call.
- US prices: Trump said he intends to suspend the federal gas tax amid soaring prices at the pump. But pausing the the levy won’t do much to relieve drivers’ pain, multiple experts told CNN. American consumers are facing a $37 billion hit from the spike in gasoline and diesel prices, according to research from Brown University.
- Stranded seafarers: Oman’s foreign minister said there is an “urgent need” to free ships stranded near the strait following a meeting with the head of the International Maritime Organization. There are as many as 20,000 seafarers trapped at sea in what the UN has called a humanitarian crisis.
Trump seriously considering resuming combat operations than he has in weeks, sources say
President Donald Trump has grown increasingly frustrated with how the Iranians are handling negotiations to end the war, and some Trump aides say that he is now more seriously considering a resumption of major combat operations than he has in recent weeks.
Trump has grown impatient with the continued closure of the Strait of Hormuz, as well as what he perceives as division in Iranian leadership that is preventing them from making substantial concessions on nuclear talks, sources familiar with the discussions said. The latest response from Iran, which Trump has deemed both “totally unacceptable” and “stupid,” has led several officials to question whether Tehran is willing to take on a serious negotiating position, they said.
There are different camps within the administration that are recommending alternating paths for how to proceed, the sources said. Some, including officials in the Pentagon, have argued for a more aggressive approach to pressuring the Iranians to the table — including targeted strikes that further weaken Tehran’s position. Others, however, are still pushing to give diplomacy a fair shot, the sources said.
Many in Trump’s orbit want Pakistani mediators to be far more direct in their communications with the Iranians. Some Trump officials have long questioned whether the Pakistanis are aggressively conveying Trump’s displeasure with the state of talks, as Trump has done publicly. Some administration officials also believe that Pakistan is often sharing a more positive version of the Iranian position with the US than what reflects reality, two of the sources said.
There has been an intense push by countries throughout the region and by Pakistan to convey to the Iranians that Trump is frustrated and this is the last chance for them to seriously engage in diplomacy, but it does not appear that Iran is listening or taking anyone seriously, a regional official said Monday.
This official said that the US and Iran are operating on two different tolerances and timelines in their approach to negotiations, and Tehran has withstood economic pressure for decades.
Trump met with again with his national security team at the White House on Monday to discuss options moving forward. Sources familiar with the talks say a major decision on how to proceed is unlikely to be made prior to the president’s departure to China, which is slated for Tuesday afternoon.
CNN’s Zachary Cohen contributed to this report.
