Oil and Gas

The red carpet was rolled out, and a trade truce was extended. Yet, beneath the pomp and pageantry of Chinese President Xi Jinping’s state visit with US leader Donald Trump on Thursday, Washington and Beijing remain locked in a much deeper strategic rivalry.

Xi arrived in Washington, DC on Wednesday evening for talks on Thursday, and Trump was there to meet him personally on the tarmac.

The meeting was the first state visit by a Chinese leader to the US in 11 years. But it is also the third time in less than a year that the two men have met face to face, as the two powers remain uneasily gridlocked in competition over AI, rare-earth metals, the question of Taiwan, and the Iran war.

Overhanging it all is the paused, but simmering, trade war between their two nations.

Almost as soon as Trump began his second term in the White House in January 2025, up went tariffs on Chinese goods as he accused China of facilitating the flow of fentanyl, a deadly drug, to the US. Beijing responded with its own levies, then restricted exports of valuable rare-earth metals which are crucial for the development and manufacture of everything high-tech, from smartphones to fighter jets. At one point, tariffs were heading towards 150 percent before being paused to allow time for talks.

Finally, the two leaders called a truce on the sidelines of the Asia-Pacific Economic Cooperation (APEC) summit in South Korea on October 30, and they met once more, in May, when Trump travelled to Beijing.

As Xi landed in Washington on Wednesday this week, the Trump administration announced that the two countries had agreed to extend an October 2025 truce which had offered some respite from the punishing tariffs, produced an agreement from China to buy more soyabeans from the US and delayed the ban on rare-earth exports from China until January 10. The prospect of a much-longed-for trade deal appeared to be in the air when US Treasury Secretary Scott Bessent told Fox News he had met Chinese ‌Vice Premier He Lifeng before Xi’s visit to “see if we could ⁠do a bigger deal as opposed to just a series ⁠of smaller things”.

But analysts have, for the most part, shot down such hopes. Beyond tariffs, they say, the simmering conflict between the two powers now encompasses new US sanctions on buyers of Russian oil – namely China – and sweeping investment and research restrictions, never mind the intensifying race for dominance in artificial intelligence.

“The two-month extension isn’t a bridge to a grand bargain – it’s a temporary sandbag holding back a structural flood,” Beijing-based Einar Tangen, a senior fellow at the Center for International Governance Innovation, told Al Jazeera.

Theatrics or continued thaw in tensions?

In fact, the truce is little more than “transactional theatre” – an attempt at good optics before the upcoming US midterm elections – Tangen said.

Trump’s deeply unpopular war on Iran has already inflicted severe damage to his chances in that vote. Democrats are leading in the polls amid concerns about the rising cost of energy, triggered by the war which the US started. Trump ultimately needs wins on other issues.

The current truce with China serves a purpose, therefore, but is fragile enough to be undone the moment political utility shifts for Trump, Tangen said.

“Success in January won’t be measured by what is solved, but by whether the knot is left tight enough to hold, but not kill,” said Tangen.

Phillippe Le Corre, professor of international relations and Asian studies at France’s ESSEC Business School, said the length of the truce extension indicates clearly that a more permanent deal remains out of grasp.

“The extensions are getting shorter and shorter, which means they haven’t found a common ground on many issues,” Le Corre told Al Jazeera.

“The two-month extension is a terrible outcome for the US. Nothing is resolved, and many Damocles’ swords are still hanging over Washington’s head,” he added.

Trump’s entire China policy, Le Corre argued, is in fact short-sighted. “That is bringing the world a lot of uncertainty,” he said.

Some analysts are more hopeful, but not much. Sun Chenghao, a fellow at the Center for International Security and Strategy at Tsinghua University in Beijing, described the extension of the trade truce as a “useful interim step”. It shows that both sides want to preserve the recent easing of tensions, which is meaningful progress, he said.

“From China’s perspective, a sustainable agreement needs reciprocal benefits and greater policy predictability,” Sun told Al Jazeera. “Additional purchases cannot indefinitely compensate for uncertainty over tariffs, technology restrictions and market access.”

The extension’s value, however, will depend on whether it produces “concrete commitments” from Beijing and Washington, Sun added.

A game of ‘economic chicken’

There is motivation to get a deal done, analysts say. Any escalation in the US-China trade war will be costly for both sides.

But there is some way to go. A Congressional Research Service report in July 2026 noted that Chinese goods exported to the US still face tariffs of 36.5 percent, while US goods entering China are taxed at 31 percent.

Any higher, and they will raise import and manufacturing costs in the US, squeeze margins and increase pressure on consumer prices, said Sun. They would also hurt US farmers and industrial exporters, he added, just as the US faces pressure from the rising costs of its war on Iran, which have pushed it into a record national debt of $40 trillion two years earlier than expected.

“Washington is playing a high-stakes game of economic chicken with a $40 trillion debt load, an inflationary sword of Damocles, zero fiscal cushion to absorb a truce collapse and a dependence [on] Chinese industrial and manufacturing inputs,” Tangen said.

US consumers and the economy in general will find it tough to survive yet another inflationary shock from renewed tariffs “at a time when the federal budget already operates like a high-wire Ponzi scheme”.

Then there is the AI race, which no one can afford to lose. According to Jon Bateman, a senior fellow at the Carnegie Endowment for International Peace, a partial “decoupling” of US and Chinese technology ecosystems is under way. US policymakers have pushed to become less dependent on Chinese tech and “to secure America’s technological future in the context of a rising China”, Bateman writes.

But that will not help if there is a collapse in valuations of companies in the AI sector, which currently drive global stock markets. An AI valuation collapse, Tangen warned, “could trigger a financial tsunami that makes 2008 look tame – making technological decoupling meaningless as the world is plunged into a depression”.

Despite the trade war and Trump’s tariffs, China’s trade with other countries has risen sharply, with the country registering a $1.2 trillion global trade surplus last year. But an escalation of the trade war with the US would nevertheless spell increased pressure on export orders, employment in exposed industries and business confidence, said Sun.

Beijing does hold one crucial ace card – it is sitting on 60 percent of the world’s known deposits of rare-earth minerals, said Le Corre. It processes 90 percent of them, too. These are the metals that all countries need supplies of for semiconductors, technological components and the manufacture of weapons, to name but a few. Last year, China began to make use of that leverage by restricting exports of five of the 12 rare-earth metals it mines in April. Then, in October, it prepared to restrict seven more – until the trade truce happened. Plans for the export restrictions are not shelved, however, merely on hold.

“[China] understood this over the past year and they are certainly not going to give up on this,” said Le Corre.

“Washington is hostile, but it is hooked,” Tangen said. “You cannot threaten China with secondary sanctions on energy while desperately needing its rare-earths to fuel your military-industrial base.”

A drawn-out path to durability

The path to a lasting US-China trade deal will be long and rocky. First, any new tariff reductions will need more coverage and duration, said Sun.

For a deal to last, it would also require “more predictable licensing and actual deliveries of rare earths and critical minerals; restraint in expanding technology restrictions; and market access reflected in regulatory approvals and completed transactions”, he said.

A durable agreement also needs regular consultations and a process for resolving complaints. If all this can be hammered out then, just maybe, there might be a chance, Sun said.

Tangen and Le Corre were less optimistic, however. “The US view of China as an existential threat has to change before there can be solutions,” said Tangen.

Le Corre, meanwhile, said that while China is a long-term planner, “durable is a word that can hardly be associated with Trump.”

The existing trade truce also risks breaking down if there are new unilateral tariffs, broader technology or mineral restrictions, or disputes over whether commitments have been fulfilled, said Sun.

Tensions over Taiwan, which China claims as its own territory, but for which the US approved an $11.1bn arms sale in December last year, could also trigger a breakdown in trade relations, the analysts said.

“Taiwan remains the ultimate low-probability, catastrophic-impact tail risk – where a single round of arms sales can snap a multibillion-dollar trade truce in an instant,” Tangen noted.

Tehran, Iran – Amid dire fuel shortages and mounting economic challenges, the Iranian government is seeking cost-saving measures for government workers and other citizens to deal with the crisis.

On Saturday, the government set office attendance hours for 8am to 1pm from September 23 to the end of the current Iranian year (late March 2027), with the remaining contractual hours to be completed remotely.

Agencies must also designate one day a week when employees and managers travel to work by public transport. In recent days, government ministers have released videos showing themselves using the metro to commute to work as part of the campaign.

Metro and bus rapid transit (BRT) systems will also be free of charge until mid-November in a bid to encourage commuters to leave their cars at home. Worn-out government vehicles will also be replaced with electric, gas-powered or hybrid alternatives, although this is expected to take years to implement.

The reopening of universities is expected to be staggered and partial, with some lessons shifted online by authorities.

Government-linked offices are required to switch off heating and turn off lights after working hours, while schools, universities, healthcare facilities and operational services are to follow separate arrangements to be announced later.

President Masoud Pezeshkian signed a directive on September 12 instructing government agencies to facilitate remote work for suitable employees to save on petrol, electricity and natural gas costs for the state.

“We have begun consumption savings with the government,” Pezeshkian said earlier this month. This is seen as effectively framing remote work and other measures for government workers as in line with other energy-saving measures that the government has asked of the rest of the population.

Resource-rich Iran has dealt with energy crises before, rooted in mismanagement and dated infrastructure, when similar cost-saving measures were implemented. But the added pressure of war with the United States and Israel has forced the government to think of creative solutions to energy shortfalls.

In early September, the cash-strapped government raised the price of fuel for the third tier of quotas for a second time in less than a year, meaning that people will pay double for any petrol use beyond 110 litres (29 gallons) per month. Imported vehicles and some other categories of cars are also limited to the most expensive tier of fuel.

For the first five months of the current Iranian year, which ended on August 22, average daily petrol production was 122 million litres while consumption was at 132 milion litres, highlighting a shortfall in supply versus demand. In the first half of the sixth month, the gap between production and consumption was around the same, at a 10 million litre shortfall.

The US naval blockade of Iran’s southern ports in place since July has halted fuel imports that previously helped balance the gap. The blockade has also stopped Iran from exporting its oil via supertankers transiting the Strait of Hormuz, affecting its foreign currency income. Crude stored on open waters beyond the blockade line is still being gradually sold to China.

Oil and gas facilities, petrochemical companies and major fuel depots were also bombed by the US and Israel, impacting production and distribution. Oil Minister Mohsen Paknejad said in early September that “a significant portion of production capacity has now been restored, and the process is continuing”.

As rampant inflation continues to squeeze most Iranians, data released this week by the Statistical Center of Iran also highlighted the damage the war with the US has dealt to the economy.

Iran experienced a massive 10.1 percent year-on-year fall in real gross domestic product (GDP) and a 26.4 percent fall in oil and gas extraction between late March and late June 2026, the centre’s data showed.

Including oil, industries and mining were down 14.7 percent, while construction was down by 6.4 percent, services overall by 4.8 percent, and transport, storage and communications by 17 percent.

The government has not released any information on how many workers are estimated to be affected by the remote work directive, or how it expected efficiency to be impacted.

But after decades of mismanagement, corruption and inefficiency among government-linked organisations, some Iranians believe it highlights a wider issue of state inefficiency.

“My unpopular opinion is that if 85-90 percent of government sector personnel are fired and 70 percent of ministries closed down, absolutely no problem will occur in the country,” a user named Mohsen wrote on X.

Zabihollah Salmani, a deputy head of the Administrative and Employment Organisation of Iran, told reporters during a press conference in August that more than 2.43 million were on its payroll.

If council, fire brigades, social security and non-government organisation workers were included, this would bring the number to more than four million people. The average monthly pay for government personnel at the end of the previous Iranian year in late March 2026 was around 240 million rials ($104 at the current exchange rate).

Asked by reporters how many of these employees could potentially be taken off the payroll without hurting output, Salmani said, “We do not yet have these figures.” He added that agencies were being asked to submit that information.

About 1,075,000 people are on the payroll of the Education Ministry, including teachers and trainee staff, while 600,000 employees work under the Ministry of Health and its affiliated networks, according to official figures.

Amir-Hossein, a young man working at a research centre linked with the government-funded University of Tehran, said that since the start of the month, he had been assigned two days of remote work. Working hours were set for 7am-1pm before, but are to be shifted to 8am-1pm starting from Wednesday, per the government.

His work can be done on his laptop, but might require some coordination on the phone or short commutes to other centres, he said. Overall, the remote work lifestyle has been beneficial.

“Sometimes I get more work done than I would have at the office,” he told Al Jazeera, asking not to use his full name due to security reasons.

As Amir-Hossein regularly uses online ride-hailing services to commute to and from his job, working from home has been financially beneficial for him.

An Iran-based economist who spoke to Al Jazeera on background said the government measures are essentially crisis control at best, and not a long-term solution to the problem.

Amid the US-Israel war on Iran, the country’s economy has suffered a sharp contraction, with its crucial oil and gas sector taking the biggest hit as the United States tightens its economic and military pressure on Tehran.

Data released by the government-administered Statistical Center of Iran showed gross domestic product (GDP) shrank by 10.1 percent year-on-year between March 21 and June 20, the first quarter of the Persian calendar.

The period covers the opening months of the US-Israel war on Iran, which began on February 28.

The economic downturn has come as Iran struggles to export its oil, one of its most important sources of foreign currency, while also contending with high inflation, a weakening rial, and disruptions to trade and industry.

Here is what you need to know:

What does the economic data say?

The headline GDP number masks an even steeper decline in Iran’s energy industry. Crude oil and natural gas activity contracted by 26.4 percent compared with the same period a year earlier. GDP excluding oil, by comparison, fell by 4.6 percent.

The damage has spread beyond the energy sector. Industry and mining contracted by 14.7 percent, services declined by 4.8 percent, and manufacturing contracted by 2.5 percent. Agriculture was the exception, growing at 2.3 percent.

Those figures come amid an already difficult economic situation in the country. Earlier this month, Iran’s 12-month average inflation reached 69.9 percent, while food, beverage, and tobacco prices rose at nearly twice that rate. Official unemployment climbed to 9.1 percent in the spring.

The rial, meanwhile, fell from about one million to the US dollar a year earlier to more than 2.2 million in early September.

What is the latest with Iran’s oil exports?

Iran’s ability to sell crude has been dramatically curtailed by the US naval blockade, imposed for most of the war.

Iranian crude and condensate loadings collapsed from about two million barrels per day in March to roughly 740,000bpd in July and just 220,000-255,000bpd in August, according to estimates from Kpler and Vortexa.

TankerTrackers.com told the Reuters news agency that 29 tankers, carrying 36.11 million barrels of crude, were trapped in the Strait of Hormuz. Meanwhile, Vortexa estimated total Iranian crude afloat had fallen from 135 million barrels at the end of July to 107 million barrels by late August.

Is Trump winning the economic war on Iran?

By several economic measures, Washington’s pressure campaign is inflicting damage on Iran’s economy.

On September 6, total trade had fallen by 25 to 35 percent, President Masoud Pezeshkian said, with imports hit harder than exports. The US blockade of the Strait of Hormuz has made it hard for ships carrying imports to reach Iranian ports.

Tehran has also explicitly linked the end of the war to economic relief. Iran’s security chief Mohsen Rezaei told Al Jazeera on Saturday that its conditions include “the release of our frozen funds and an end to the naval blockade”.

In addition to the naval blockade, US Treasury Secretary Scott Bessent last month announced an economic pressure campaign against Iran, pledging to target its financial interests across the world. He said the US would target all of Iran’s sources of revenue, including oil, to prevent other countries and companies from doing business with Tehran.

The US-Israeli attacks and Iran’s retaliations have disrupted Tehran’s trade with one of its main economic partners, the United Arab Emirates.

The UAE last month announced an indefinite trade embargo on Iran after accusing its forces of carrying out several ballistic missile attacks, which Tehran denied, calling it a “false flag operation” by Israel and the US.

Chris Beauchamp, market analyst at IG Group, said, “Most wars are contests of stamina more than anything else.”

“The 10 percent drop in Iranian GDP is a sign that the US is succeeding in putting pressure on its foe. But the question rests, as it has done since March, on whether Iran can weather the fall in economic activity better than the US can stand the surge in energy costs,” he told Al Jazeera.

“For a regime prepared to do anything to stay in power, this news will make little difference, so long as the security forces remain loyal,” he added.

What is the latest with diplomatic efforts to end the war?

While Iran has taken a defiant stance against US economic and military pressure, it has indicated repeatedly that it remains open to diplomatic means to end the nearly seven-month-old war.

On Saturday, Rezaei told Al Jazeera that Iran conveyed a formal set of conditions to Washington through Qatari mediators for ending the war.

Iranian state media outlet IRNA reported on Monday that Pakistani Interior Minister Mohsin Naqvi was set to visit Tehran, without specifying the agenda or other details.

Mediators Qatar and Pakistan have been working to re-establish negotiations between the two sides since their memorandum of understanding (MoU) expired last month.

Meanwhile, Iranian Foreign Minister Abbas Araghchi will stop briefly in Qatar before going to New York for the UN General Assembly, IRNA reported.

Iran has repeatedly said it remains ready for any new strikes by Washington.

Rezaei said on Saturday Tehran did not rule out a new US strike against Iran, calling the possibility “very much on the cards” based on his country’s military assessments.

Mark Pfeifle, a Republican strategist and former White House and national security official, said Iran and the US are still willing to strike a deal.

“Sometimes in diplomacy it’s what’s taken off the table,” he told Al Jazeera.

Pfeifle said when Rezaei reiterated his demands for talks with the US, he spoke of “ending the blockade, releasing the frozen funds [and] stopping the attacks”.

“But he left off reparations and reconstruction money, which tells me that there’s a concrete sign that amongst all the rhetoric, which is still very strident, that the pressure campaign that the US is putting on Iran is having some effect,” he said.

“And it tells me that both sides are still looking for room to negotiate in the coming weeks.”

The outage marks at least the sixth one this year after a United States-imposed energy blockade went into effect.

Cuba has worked to restore power after suffering a significant blackout that left many parts of the country in the dark.

The state-run company in charge of operating the country’s electrical system, Union Electrica (UNE), said nearly half of its customers in the capital of Havana had regained power on Saturday.

“The re-establishing is being done gradually, as conditions permit,” UNE posted on social media.

The latest blackout, at least the 12th since late 2024, first affected five of Cuba’s eastern provinces, including Havana, before spreading across the whole island. It is at least the sixth this year alone.

Cuban authorities told the Reuters news agency on Friday the collapse was the result of a failure in high-voltage transmission lines in the central part of the country. UNE said “unstable weather conditions” also played a role.

For years, Cuba’s ageing infrastructure and fuel shortages have led to sporadic blackouts. But power outages have become more frequent after the United States, in a bid to put political and economic pressure on the country’s government, imposed an energy blockade in January.

United Nations human rights experts have condemned the US oil blockade, calling it a violation of international law and warning ‌that ‌Cuba risks becoming a “silent Gaza” as shortages and blackouts grow ever more critical.

Some of the island’s residents said they were already out of power when Friday’s blackout happened.

“Yesterday, I’d gone without power for 24 hours. They turned the lights on for an hour, and then the grid collapsed,” Havana resident Frank Lorenzo, 23, told Reuters.

Others, like Lidia Fernandez, told the news agency AFP that a lack of fuel makes it difficult to power backup generators, which run on imported diesel.

“It’s one thing after another: no water, no gas for cooking, no electricity,” the 36-year-old teacher said.

Fernandez added, “Honestly, I don’t know how we haven’t gone crazy.”

Italy’s defence minister warns of severe economic fallout if Bab al-Mandeb becomes impassable, bypassing EU delays.

Italy will deploy warships to ensure safe passage for its commercial vessels through the Bab al-Mandeb strait, Defence Minister Guido Crosetto said, adding that Rome would not wait for a joint decision from the European Union.

“We have the capabilities to protect the passage,” Crosetto said, warning that if the waterway became impassable, the economic consequences would be severe.

The Italian defence minister said that Rome “must not allow bureaucratic delays in decision-making to exacerbate an already complex situation”.

Bab al-Mandeb links the Red Sea to the Gulf of Aden, forming one of the world’s busiest shipping corridors between Europe and Asia and a critical route for oil, gas and container traffic heading to and from the Suez Canal.

Roughly 12 to 15 percent of global trade has historically passed through the narrow waterway, which separates Yemen from Djibouti and Eritrea on the African side and is only about 30km (19 miles) wide at its narrowest point.

The strait’s importance has grown sharply since Iran effectively seized control of the Strait of Hormuz earlier this year amid its war with the United States and Israel, choking off the world’s most important oil chokepoint and pushing much of the Gulf’s crude exports towards alternative routes.

Saudi Arabia, in particular, has increasingly relied on pipelines and Red Sea shipping to bypass Hormuz altogether, making the Bab al-Mandeb strait one of the last major arteries still open to Gulf oil reaching global markets.

Control of the strait has been contested for years, as Yemen’s government, Houthi rebels and, at times, forces in the region have held stretches of its coastline at different points since the war in Yemen began in 2015.

The significance of the strait has been hit dramatically in the past few weeks, when the Iran-backed Houthi movement launched a rapid offensive that brought the entirety of Yemen’s western Red Sea coast under its control, including several strategically located islands.

The advance has given the Houthis effectively unrestricted access to the waterway, a development seen as a major setback for international shipping, given the group’s history of attacking vessels it associates with the US or its allies in the region.

The US and the European Union have already carried out military operations aimed at better protecting merchant ships from Houthi attacks in the area, though those efforts have struggled to fully secure the route as fighting in Yemen has escalated.

New Delhi says it has ‘made clear’ its determination to ‘protect its trade and economic interests’.

India has warned the United States that new measures to levy tariffs over the purchase of Russian oil could impact ⁠bilateral ties, hours after the US Congress approved a bill that would give President Donald Trump new abilities to punish buyers of Russian oil.

The US House of Representatives on Wednesday passed a sweeping sanctions and tariff bill intended to increase economic pressure on Russia over its invasion of ⁠Ukraine.

The bill targets Russia’s energy and defence sectors, President Vladimir Putin and other senior officials, as well as Moscow’s so-called shadow fleet of tankers used to circumvent Western sanctions.

It also authorises President Donald Trump to impose stiff tariffs of up to 100 percent on countries, including India, to reduce their dependence on Russian oil and gas, and⁠ extend sanctions on Iran.

The bill has been sent to Trump to sign into law.

India’s foreign ministry said on Thursday that it “remains firmly committed to ensuring energy security for its 1.4 billion people”.

The Indian foreign ministry said that it had noted the bill’s passage, adding that New Delhi had raised the issue with various US interlocutors in recent months, and had “very clearly articulated” the potential implications for the bilateral relationship and the international energy market.

“The Indian side has also made clear its determination to take all necessary measures to protect its trade and economic interests,” it said in a statement.

The government would work closely with trade and industry bodies to deal with the legislation’s implications, it added.

India, the world’s third-biggest oil importer, is among the biggest buyers of Russian oil, which is seen as helping Moscow replenish its budget since it launched its full-scale invasion of Ukraine in February 2022 and was hit with ⁠sweeping Western sanctions.

New Delhi has repeatedly sought to resist pressure to reduce its oil trade with Russia, saying its large population and economy need secure, affordable and reliable energy supplies.

The symbolic move comes as Argentina escalates its claim over the British-administered territory.

An Argentinian judge has ordered the suspension of a British-Israeli oil project near the Falkland Islands in a purely symbolic move as Argentina escalates its claim over the British-administered territory.

Wednesday’s interim ruling issued by a court in Argentina’s southernmost province, Tierra del Fuego, follows a lawsuit filed by 1982 war veterans and environmental lawyers earlier this month.

The plaintiffs sought to block Britain’s Rockhopper Exploration and Israel’s Navitas Petroleum from the Sea Lion oilfield, located about 220km (137 miles) from the islands.

The judge ordered the companies to “refrain from initiating, pursuing, carrying out or having carried out any material actions” that would involve drilling, installing infrastructure or extracting hydrocarbons, according to a ruling seen by the AFP news agency.

Additionally, the suspension applies “until such time as the environmental impact assessment procedure has been conducted before the national authority competent in environmental matters”.

The judge gave the parties 10 days to provide information, including details about the status of the project, its contractors and its financiers.

President Javier Milei’s administration has also taken legal action against the project, arguing it violates a United Nations resolution calling for both sides to desist from unilateral actions in the islands until their dispute is resolved.

The court order comes just a day after Argentina announced it would file further legal complaints against companies exploring for oil near the islands, intensifying its campaign against businesses operating in the British overseas territory.

Britain and Argentina fought a brief but bitter 10-week war in 1982 over the South Atlantic islands, known to Argentines as the Malvinas.

The 1982 war ended with an Argentinian surrender after 74 days of conflict that killed 649 Argentines and 255 British troops, as well as three Falkland Islanders.

Buenos Aires has doubled down on its claim over the Falkland Islands after US President Donald Trump said Washington was open to reviewing its historically neutral stance on the territory.

London maintains the islands are British and rejects the jurisdiction of Argentinian courts in the Falklands.

The islanders themselves voted overwhelmingly in 2013 to remain British.

But Argentina rejects that outcome, arguing that the principle of self-determination does not apply to a population it considers implanted by Britain after 1833.

DEVELOPING STORYDEVELOPING STORY,

The 25 basis-point hike is the first raise in three years and comes ahead of critical midterm elections in the United States.

The United States Federal Reserve has said it will raise interest rates by a quarter of a percentage point as inflation, driven by soaring fuel prices amid the US-Iran war, continues to weigh on the economy.

The Fed, which is the central bank of the US, said on Wednesday that it will hike interest rates by 25 basis points to 3.75 percent to 4 percent.

It is the first hike in more than three years and comes just weeks before the US midterm elections, despite repeated demands from US President Donald Trump to lower rates.

“Economic activity is expanding at a solid pace. While uncertainty remains elevated owing, in part, to geopolitical developments, domestic spending has been resilient,” the Fed said in a statement on Wednesday.

“Inflation remains elevated. Today’s policy action will support a timelier return to the Committee’s 2 percent goal. The Committee will deliver price stability.”

After Wednesday’s hike, Fed officials expect one more rate increase this year, according to their quarterly projections.

CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 92.3 percent chance of the Fed increasing rates to 3.75 to 4 percent. A week ago, that forecast was a 40 percent chance of a quarter-percent rate increase.

But in the days since, a slew of data shifted those expectations.

For one, consumer prices jumped in August by 0.4 percent, the highest increase in four months. On an annual basis, prices rose 3.4 percent, matching the increase recorded in July, while the job market remains healthy.

Since then, benchmark crude oil prices have continued to soar as strikes in the US-Israel war on Iran have intensified. Brent crude hovered near $109 per barrel on Tuesday.

The average price for a gallon (3.8 litres) of petrol is $4.36, up 14 cents in the past week, and up from $4.06 in the last month, according to the American Automobile Association (AAA), which tracks daily petrol prices.

Diesel, on the other hand, was at $6.31, the highest recorded average and roughly double from a year ago. That, in turn, is expected to further stoke prices as diesel is used in trucks to haul everything from fruits and vegetables to steel and cement.

At the same time, the benchmark 10-year Treasury yield broke above the psychologically important 5 percent threshold on Tuesday, hitting 5.02 percent, its highest level in 19 years. The yield serves as a benchmark for borrowing costs, including car loans and home mortgages, and is a bellwether for inflation.

“The economy is in an unusual place,” Michael Klein, professor of international economic affairs at Tufts University’s Fletcher School and executive editor of EconoFact, a nonpartisan economic and social policy publication, as unemployment remains at a comfortable level while higher prices continue to stick, sending inflation beyond the Fed’s target of 2 percent.

“There [has been] a lot of pressure on Chairman Warsh to raise interest rates because of inflation coming in high, and that has been compounded by concerns about Trump’s pressure” as the president has continued to demand that interest rates be lowered, Klein said.

“Higher interest rates tend to weaken the economy… but if the market believes that there’s going to be a rate increase, it’s priced in already as prices move on news, so this won’t be news,” Klein said, adding that should help steady yields.

Moscow and Copenhagen trade blame for the incident as Denmark says it will not invoke NATO treaty.

Moscow has warned Denmark to avoid “reckless” action after a Russian frigate fired two flares that narrowly missed a Danish military helicopter.

Moscow’s ambassador in Copenhagen, Vladimir Barbin, on Tuesday insisted that “dangerous manoeuvres” taken by the Danish aircraft were to blame for the Baltic Sea incident.

The Russian diplomat told state news agency RIA Novosti that he had delivered a formal note demanding steps to prevent a repeat of the episode.

He said that the helicopter’s actions were provocative and condemned Danish attempts to call them routine, saying they raised “serious concern about the possible consequences of such recklessness”.

The Fennec helicopter was on a routine mission to photograph the frigate as it sailed in international waters off Denmark, the Danish defence command said. Ships typically use such flares as warning signals.

Denmark’s Defence Minister Jeppe Bruus told TV 2 News that one flare passed within a “matter of metres” of the aircraft, and accused Russia of “deeply unprofessional seamanship”.

When asked if Denmark would seek Article 5 consultations over the incident – invoking the NATO measure that considers an attack against one member of the bloc to be an attack against all of them – Bruus said the incident was being taken seriously, but “we are not there”.

Barbin said he had complained last year about what he called dangerous fly-bys and low hovering by a Danish helicopter over the Russian warship Vice-Admiral Kulakov.

Kremlin spokesman Dmitry Peskov declined to comment, saying he lacked details.

The Danish Straits – where most Danish incidents with Russia have taken place – are the Baltic’s main shipping gateway and a key oil route, including for Russian oil tankers.

Danish Prime Minister Mette Frederiksen called the incident serious but not surprising, describing it as part of a pattern of intensifying Russian hybrid warfare against Europe and testing NATO.

‘Fear and discord’

“Russia wants to sow fear and discord,” Frederiksen said, calling for closer unity and stronger defences for Denmark and Europe.

Russia denies carrying out hybrid attacks in Europe. However, the potential for the war in Ukraine to escalate and entangle Europe’s NATO member states is rising.

A spokeswoman for Russia’s Foreign Ministry later on Tuesday warned Western politicians and diplomats to “soberly” assess ⁠the risks of travelling to Ukraine, following a Russian drone strike on a rail line on which a train carrying former British ⁠Prime Minister Boris Johnson ⁠and former Swedish Prime Minister Carl Bildt had passed minutes earlier.

Rail hubs ⁠and transport infrastructure serving Ukraine’s ⁠military are legitimate ⁠targets, she said, and Russia warned foreign diplomats in May to leave ‌Kyiv because of strikes on Ukraine’s military-industrial ‌complex.

Demonstrators burn tyres and block highways as protests over increased fuel prices grip Syrian cities.

Protests have erupted across several cities in Syria after the government increased fuel prices, with demonstrators blocking a main highway for several hours.

The government raised prices on Sunday by up to 40 percent on diesel and 28 percent on petrol, in what it said were temporary increases caused by a sharp rise in the global cost of securing fuel.

Syria’s government also cited an overhaul of the critical Baniyas refinery for higher prices, saying it will raise capacity from 80,000 to 130,000 barrels per day.

Protests were reported in Hama, Khan Sheikhoun and Maarat al-Numan. Footage published by Al Jazeera shows crowds gathering on the street and burning tyres. The price increases also prompted fierce debate on social media.

The country is currently producing about 102,000 barrels of oil per day, while it needs about 325,000 barrels per day for domestic consumption and is relying on imports to make up the difference, Syrian Energy Minister Mohammed al-Bashir said on Saturday.

The Ministry of Energy said it would continue to review prices as global market conditions change and would work over the long term to expand refining and storage capacity, according to the state-run Syrian Arab News Agency (SANA).

Syria’s fuel supplies are key to the country’s economic recovery as it seeks to rebuild after 14 years of war.

Prices spiked as attacks on oil tankers escalated in the Middle East.

Oil prices have increased by four percent, with benchmark Brent crude hitting $105 a barrel after the biggest rise in attacks on shipping since the Iran war began spurred trader concerns about further supply disruptions.

Brent crude futures were up $4.05, or four percent, at $105.26 a barrel by 1215 GMT on Thursday. United States oil topped $100 a barrel for the first time since May, as West Texas Intermediate crude futures CLc1 rose $3.99, or 4.15 percent, to $100.04.

Brent prices have surged by more than 30 percent from lows touched in early August, as a permanent agreement between the US and Iran to cease attacks never materialised and fighting resumed.

Iran-aligned Houthis seized control of Yemen’s port of Mocha on Thursday, further threatening Red Sea traffic, while Gulf traffic remains restricted through the Strait of Hormuz as tanker attacks in the region have intensified in recent days.

“The recent run-up in prices lays bare the market’s approach: this conflict will last longer than anticipated even a month ago, let alone at the beginning of the summer. If oil supply and exports are diminished, the oil balance remains tight and prices remain elevated,” PVM analyst John Evans said.

Iran said it had attacked 10 ships near the Strait of Hormuz on Wednesday, after the US hit five Iranian oil tankers. Iran’s Islamic Revolutionary Guard Corps said it would escalate its response to any further attacks.

While fears of prolonged and more severe supply disruptions in the Gulf have lifted Brent above $100, analysts say the durability of the rally will hinge on China.

Chinese demand

China, the world’s largest crude importer, has stepped up purchases in recent weeks after months of subdued demand, boosting physical crude markets, ING analysts said in a note.

If Chinese buying continues to recover, it could amplify the impact of any supply disruptions and drive prices higher, while a pullback in imports could temper market gains, ING said.

“For months, the bearish case rested on soft Chinese demand,” said David Jorbenaze, global oil market lead at commodities information provider, ICIS.

Rising oil prices have worsened worries about inflation and cranked up pressure within the bond market, helping to lower stocks again on Wall Street.

The S&P 500 fell 0.6 percent and is on track for a fourth straight loss.

The increase in oil prices has pushed the price for a gallon of regular petrol to an average of nearly $4.28 across the US, according to the American Automobile Association. That is not only costing more at the pump but also through higher prices for all kinds of products that move by truck to store shelves.

Following Thursday’s reports, traders are betting on a close to 70 percent chance the Fed will raise the federal funds rate at its meeting next week. That’s up from the 61 percent probability seen the day before, according to data from CME Group. That’s also despite President Donald Trump’s consistent lobbying for interest rates to go lower rather than higher.

Ukraine launches one of its deepest strikes to date, targeting gas plants in Russia’s Arctic region.

Russian forces have launched attacks across Ukraine, killing at least seven people, according to Ukrainian officials, as Kyiv claimed responsibility for a drone attack that set off a fire at a natural gas plant deep in Russia’s Arctic region.

Four people were killed in a Russian attack in Mykolaiv in southern Ukraine overnight on Thursday, while three were killed in a drone attack on a shopping centre in the northeastern city of Sumy, according to Ukrainian authorities.

Heorhii ⁠Reshetilov, the acting governor of the Mykolaiv region, said the Russian strikes there hit both civilian and industrial infrastructure, killing two men and two women. At least 19 others were wounded, he said on Telegram.

The attack in Sumy left at least 14 people wounded, according to Oleh Hryhorov, head of the Sumy Regional Military Administration. Three of the victims were children, he said on Telegram.

The Russian Ministry of Defence confirmed the attack in Mykolaiv, but said it targeted a drone warehouse. The ministry said it also hit the Ukrainian port of Chornomorsk and two vessels near Odesa on the Black Sea.

The targets of the strikes were being used for military purposes, the ministry claimed.

The attacks came after Russian authorities said Ukrainian forces had launched a drone attack on the country’s Yamal-Nenets region, which is located some 2,800 kilometres (1,700 miles) from the Ukrainian border.

Dmitry Artyukhov, the region’s governor, said the attack targeted an industrial facility in Novy Urengoy. The attack was repelled, but falling debris from the drone caused a fire, he said on Telegram.

“The main thing is that there were no deaths or injuries. The extent and nature of the damage are being determined,” he added.

Artem Zhoga, the Kremlin’s envoy to the Urals, said Wednesday’s strike was the first ever to hit the Arctic part of the region.

Ukraine’s Special Operations Forces (SOF) confirmed the attack in a series of posts on X.

“For the first time! Deepest strike of the war: Ukrainian SOF hit critical russian plants more than 3,000 km away,” it said. “Ukraine’s Special Operations Forces carried out the deepest strike inside russia since the beginning of the full-scale war.”

In the posts, the Ukrainian force claimed it “successfully struck” two gas plants, Novy Urengoy and Purovsky.

“Until today, the area was considered a safe rear zone for the aggressor,” it added.

The Ukrainian force said the facilities play a key role in Russia’s gas industry, processing large volumes of condensate from gas fields across the Yamal region, processing millions of tonnes of condensate per year.

Gazprom used ⁠to export gas from Yamal as far as Western Europe ⁠until relations broke ⁠down following the start of Russia’s war in Ukraine in 2022.

It estimated the region’s gas resources at ‌26.5 trillion cubic metres as of 2020, enough to cover global demand for more than ‌six ‌years.

Ukraine has escalated its long-range strikes on Russia in recent months, in retaliation for daily Russian bombardment of Ukrainian towns and cities.

Earlier this month, Ukrainian President Volodymyr Zelenskyy said his country’s drones would make Russian airspace “completely unsafe” for the duration of the war.

Tehran has threatened “serious consequences” for South Korea if it interferes in the US-Israel war on Iran.

The warning comes amid reports that Seoul is mulling contributing to the US naval blockade of the Strait of Hormuz passage, which has hampered Iran’s oil exports.

In a statement posted on X on Monday, Ministry of Foreign Affairs spokesman Esmaeil Baghaei said Iran and South Korea had more than 64 years of diplomatic relations based on mutual respect and that Tehran values that friendship.

However, if South Korea joins the United States in its military actions against Iran at a time when the country is defending itself from what he called US aggression and “war crimes against women and children”, then there will be consequences, he warned.

Baghaei threatened that Iran would regard any military presence or participation in operations by another country in the Gulf and the Strait of Hormuz “would inevitably be regarded as direct support for the aggressor and would have serious consequences”.

“No sovereign and responsible country should succumb to US pressure and intimidation and become complicit in acts of aggression and horrific crimes against the great Iranian nation,” he added.

Seoul did not respond directly, but a Ministry of Foreign Affairs statement on Monday said it is communicating with the international community over the situation in the passageway.

Here’s what we know about how South Korea is getting roped in:

Why is South Korea involved?

Seoul, a close ally of Washington, has been under pressure from US President Donald Trump.

The issues began in mid-August, when Trump revealed in an interview, and later online, that he had spoken to South Korean President Lee Jae Myung and asked that Seoul give “a little hand” in the war on Iran.

According to media reports, the two leaders had spoken over the phone on May 17.

Seoul said, “No, thanks!”, according to Trump’s message on social media.

However, as South Korea now knows, saying no to Trump has repercussions.

On August 16, Trump announced that the US would significantly scale back joint military drills it holds annually with South Korea – the evening before they were scheduled to begin.

The Ulchi Freedom Shield (UFS) exercises are meant to sharpen Seoul’s readiness in case of a North Korean attack. They usually last for more than 11 days but were reduced to five.

In a post on his Truth Social site, Trump claimed the drills were “costly” and that they send a “hostile” signal to North Korean leader Kim Jong Un, with whom he is trying to build a relationship. South Korean Foreign Minister Cho Hyun said in parliament there was no warning from the US.

Trump also questioned why South Korea would refuse his request when thousands of US soldiers are stationed on the Korean Peninsula.

The US also cancelled another military exercise scheduled for September, although South Korea’s military revealed it received a notification much earlier in June, with Washington citing constraints due to the war on Iran.

How has South Korea responded?

President Lee, a liberal who pushes for a dialled-down defence posture, has opted to negotiate. His office earlier released statements saying it hopes for “meaningful dialogue” with Trump.

South Korea’s Yonhap news agency reported on Monday that Washington has, however, “ratcheted up pressure” on Seoul.

On Friday, a South Korean presidential official told Yonhap that Seoul could consider a military contribution to international measures seeking to free up navigation in the passageway as long as it does not affect the country’s defence readiness.

South Korea is looking at various options, the official said, including possible cooperation with France, the United Kingdom and other allies on sending noncombat and search-and-rescue forces.

The South Korean military has also started reviewing assets and troops that could be deployed, including maritime patrol aircraft, explosive ordnance disposal teams and unmanned mine detection and clearing systems, he added.

Such a move would be unpopular. The opposition has spoken out against a possible deployment, as have some within Lee’s ruling Democratic Party. Many South Koreans have also protested against the US-Israel war on Iran.

What is the history of US-South Korea relations?

South Korea became one of the US’s closest allies after Washington backed Seoul against Pyongyang in the Korean War of 1950.

The US supported Seoul’s economic and military growth in the years after. Under a treaty, some 29,000 US soldiers have been stationed permanently on the Korean Peninsula since the end of the war. Seoul has also relied on US defence might to deter nuclear-armed North Korea.

In return, South Korea supported several US wars, including the Iraq War, and is designated an important non-NATO ally.

In 2025, however, Washington imposed a 25 percent tariff on the country, testing relations. Seoul opted to negotiate rather than retaliate, leading the US to lower tariffs to 15 percent.

Many South Koreans were also alarmed after hundreds of South Koreans were arrested in Immigration and Customs Enforcement (ICE) raids on a Hyundai plant in Georgia in September 2025.

Last October, Trump travelled to Seoul in a historic state visit, and earlier this year, President Lee visited the US. Lee is also trying to resume dialogue between Washington and Pyongyang.

How is South Korea being affected by the US-Israel war on Iran?

South Korea is facing an economic crisis. The country relies on the Gulf supplies via the Strait of Hormuz for 60 to 70 percent of crude imports, meaning supply is being severely hit. The war has led to soaring inflation, causing the Korean won to fall to a 17-year low.

Seoul therefore has an interest in freeing up the strait. However, under Korean law, the government will require parliament’s approval before a military deployment, although some governing party members could oppose it.

Oil prices are rising to nearly a six-week high amid a wave of strikes between the United States and Iran in the Strait of Hormuz, through which roughly a fifth of the world’s oil supply travels during peacetime.

On Monday, Brent oil futures, the global benchmark, rose to hover around $97 a barrel — up 9 percent over the last five days and 19 percent over the last month. Monday’s market moves are approaching the highest point since July 24th, when prices topped $97.93.

US West Texas Intermediate crude similarly rose to $92.27 a barrel, up 79 cents, also a near six-week high.

In recent days, strikes escalated in the Strait of Hormuz. The US hit three Iranian oil tankers on Saturday, while Iran’s Islamic Revolutionary Guard Corps (IRGC) said it had struck three tankers and three US-linked vessels in other areas.

“This is a reflection of continued conflict and exchange of fire. The supply deficits globally are persisting, and there is little end to these shortages,” Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security (CNAS), told Al Jazeera.

On Monday, Saudi Aramco’s Jizan facilities were struck for the second time in the last month, according to reporting from the Financial Times that cited two people familiar with the matter.

“The fact that a Saudi refinery in Jizan was hit, possibly delaying its return to production, didn’t help,” Ziemba added.

Amid increased strikes, there’s less traffic in the Strait of Hormuz, with an average of 10 commodity ships crossing the vital chokepoint each day over the last 10 days, according to Kpler, a data analytics platform.

“Crude went back down to what the pre-war level was in early July. Then it increased again, and then it reduced again, and now it’s increasing again on this weekend’s exchange plus the Aramco attack,” Arif Gasilov, a partner at the Gasilov Group, an energy advisory firm, told Al Jazeera.

“I would say that you might eventually see an inflection point, depending on how long this keeps going on, where a ceasefire doesn’t move the market at all, maybe by just a dollar or two.”

US consumers pinched

US consumers are feeling the impact of heightened oil prices at the petrol pump. The average price for a gallon (3.78 litres) of petrol has jumped 7 cents over the course of a week, reaching $4.15 nationally on Monday, up from $4.08 this time a week ago, according to the American Automobile Association (AAA), which tracks daily petrol prices.

That’s up from $4.04 this time a month ago and $2.98 from February 28th, when the US and Israel first struck Iran, marking a 39 percent increase since the war began.

Last week, diesel prices hit all-time highs at $5.85 per gallon.

“US diesel prices have never been this high, and now the countdown starts for the trickle-down to everything consumers buy… record diesel will start funnelling down into the economy,” Patrick De Haan, head of petroleum analysis at GasBuddy, said in a post on the social media platform X.

Prices have continued to climb since, with average prices on Monday topping $5.90 per gallon.

“Markets are pricing in longer disruptions. It continues to be in product markets where the biggest disruptions lie, though, including diesel,” Ziemba added.

Those price gains are weighing on Americans, who have spent an average of $764.59 per household on fuel since the war began. That’s $418.82 more than usual, according to Brown University’s Watson School of International and Public Affairs.

Ahead of the US’s September 5-7 Labor Day weekend, the unofficial end of summer and a popular time for US travel, AAA forecasts showed a 20 percent increase in flight costs compared to the same weekend last year.

Ahead of the midterm elections, the economy is emerging as a key issue for US voters — and a potential warning sign for Republicans. Polls show voters souring on President Donald Trump’s handling of the economy, with his economic approval rating falling to a new low in a recent Financial Times poll. Just 17 percent of Americans approve of his handling of the economy.

An Economist/YouGov poll similarly found that 39 percent of Americans believe Democrats are doing a better job handling the economy, compared with 32 percent who said Republicans are.

China pressures

Southeast and East Asian markets rely more heavily on imports travelling through the Strait of Hormuz directly than the US, but Beijing has moved to insulate itself from the disruption by turning to domestic sources, including its strategic petroleum reserve (SPR).

“China has been managing this situation successfully since the beginning of the war. We know that China has many domestic resources, despite rising oil prices,” John Gong, an economics professor at the University of International Business and Economics, told Al Jazeera.

“China has been conserving its oil and gas consumption for quite some time now. China was prepared for these challenges,” Gong said.

He also stressed that China’s close relations with Russia give Beijing another source of supply, with Moscow able to provide nearly half of China’s daily oil needs.

China has also begun tapping into its SPR while reducing its reliance on imports, as Beijing accelerates a broader shift towards alternative energy sources and vehicles that require little or no oil to operate.

“We have national strategies focused on transitioning to clean energies like solar and green power,” Gong said. “When we look at the vehicles purchased in China, more than 50 percent of cars sold on the Chinese market are electric.”

The global ratings agency has also maintained the country’s sovereign rating at AA.

Fitch Ratings has removed Qatar from “Rating Watch Negative” while maintaining its sovereign rating at AA amid the US-Israel war on Iran and the Strait of Hormuz blockade.

The global ratings agency announced the decision on Friday, citing reduced risks to the country’s liquefied natural gas (LNG) facilities since March.

The agency, however, kept a negative outlook on the rating, citing ongoing risks surrounding the movement of gas exports through the blockaded Strait of Hormuz.

“The impact of the war on the credit profile will take longer to discern,” the agency said in a statement.

Qatar, one of the world’s largest gas exporters, continues to face export disruptions and shortages caused by damaged energy facilities during the war on Iran, which began six months ago.

Earlier this year, credit agencies S&P and Moody’s also affirmed Qatar’s ratings, noting that the country’s sizeable financial cushion helps protect it from the economic impact of the war.

The global energy order is changing.

US President Donald Trump celebrated on Truth Social what he called the “biggest oil deal in history” – a 100-year concession on 17 oil fields in Venezuela that would secure 65 billion barrels of oil.

Around the same time, QatarEnergy informed Edison, one of its biggest European customers, that force majeure on its liquefied natural gas (LNG) deliveries would continue until early November. Five more cargoes were cancelled, taking the total to 29, or about 3.8 billion cubic metres of gas.

The contract has run since 2009 and normally covers roughly a tenth of Italy’s annual consumption. Edison has kept supplying its customers by finding replacement cargoes elsewhere, including in the US.

For decades, the bargain between Washington and the Gulf was clear. The US protected the region and kept its sea lanes open; Gulf producers supplied the energy on which the global economy depended and settled their sales in dollars to benefit the US economy.

That bargain has been turned on its head. America no longer simply protects Gulf energy. It competes with it, and increasingly profits when the Gulf cannot deliver due to insecurity.

Six months of war have reportedly impacted Qatar’s LNG exports significantly. Other Gulf countries like Kuwait, Saudi Arabia and the UAE have seen a substantial drop in oil exports as well. Meanwhile, US oil and gas have moved into the space left behind, with US energy giants raking in record-high profits.

It is important here to distinguish between the US as a government and the dense network of private interests that operates around it. Washington wants strategic leverage over Iran and continued influence over the Gulf states. Energy companies want access to reserves, favourable regulation, profitable prices and new customers. Trump brings the two together under the banner of energy dominance. State power opens the door; private capital walks through it.

Israel adds another layer. Chevron operates its two main offshore gas fields, owning almost 40 percent of the Leviathan gasfield and 25 percent of the Tamar gasfield. Leviathan is expanding after a $35bn agreement was signed last year to increase exports to Egypt.

Israel is therefore not an independent energy rival to the US in the way Qatar is. Its growing role as an Eastern Mediterranean gas hub is tied to a US operator and fits comfortably within a US-backed regional system linking Israel, Egypt and Jordan.

Chevron is the thread running through much of this story. It has major interests in US production, controls Israel’s most important gas assets and is positioned to expand in Venezuela. This does not mean Chevron determines foreign policy. It does show how easily the exercise of American power can translate into commercial opportunity for American companies.

Israel is also determined not to let the confrontation with Iran end on terms it considers not to be in its interest. The US-Iran memorandum of understanding signed in June fell well short of Israeli war aims. Israel said it was not bound by all its provisions, insisted on freedom of action in Lebanon and briefly resumed attacks while the US was trying to sustain negotiations.

For Israel, ceasefires have tended to be pauses, not settlements: opportunities to regroup while preserving the option of striking again. The reasons are chiefly strategic. Israel wants to prevent Iran from rebuilding its nuclear, missile and regional capabilities, while Israeli leaders fear accepting a deal and looking weak ahead of elections.

The consequences of Israel pushing for continuous conflict align with US energy interests. Continued pressure on Iran keeps the Strait of Hormuz insecure, Gulf exports vulnerable and risk premiums for energy transport high. Israel and US energy companies do not need to be following a common plan for their interests to reinforce one another.

Price is where the argument becomes clearest. Trump talks constantly about cheap oil, but US producers cannot prosper if it becomes too cheap. A Dallas Federal Reserve survey found that US companies needed an average price of about $43 a barrel to operate existing wells and $66 to drill new ones profitably. The two main Permian basins sit at roughly $61 to $62.

Trump therefore needs a narrow band: oil cheap enough to contain inflation, but expensive enough to keep shale, fracking and export investment alive. Gulf insecurity helps maintain it. The disruption need not be catastrophic. It only has to keep prices at a point where the next American well makes economic sense.

This may help explain the attraction of a no-war, no-peace outcome. A full regional war could close Hormuz, send prices soaring and threaten Chevron’s Israeli operations. A durable settlement would remove the risk premium, restore confidence in Gulf supply and limit Israel’s freedom of action.

Managed insecurity sits conveniently between the two: enough restraint to protect US-linked production, but not enough diplomacy to make Gulf energy entirely dependable again.

Israel keeps Iran under pressure. Washington retains leverage over its allies. US producers gain customers and commercially supportive prices. The danger lies in the convergence: Several powerful actors now have something to gain from preventing the crisis from reaching a final resolution.

The Gulf still holds vast reserves and enjoys production costs US companies cannot match. But reserves alone no longer decide market power. Reliability does. Only an estimated 3.5 to 5.5 million barrels a day can bypass Hormuz through Saudi and Emirati pipelines. The rest remains exposed to a single point of failure, despite decades of arms purchases, foreign bases and security guarantees.

The greatest threat to the Gulf’s energy future is not depletion. It is that customers learn to live without it. Every delayed tanker strengthens the case for an Atlantic alternative. Every Qatari cargo replaced by US LNG creates a relationship that may endure long after the war.

US power once rested partly on protecting the flow of Gulf energy. It now rests increasingly on replacing it.

The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial stance.

Venezuela’s National Assembly voted to back the 65-billion-barrel oil deal, despite no details being publicly released.

United States Energy Secretary Chris Wright is set to travel to Venezuela, after the South American country has approved a deal that will see the US seize effective control of a large portion of its oil reserves.

An anonymous US official told reporters that Wright will travel to Venezuela on Tuesday, as the administration of President Donald Trump presses forward with the controversial energy deal.

“First and foremost, it furthers the national interest of the United States,” the official said, adding that it is “critically important” for the US to be able to “to buy oil at cost reliably”.

Details are still emerging about the arrangement, likened by critics to deals imposed by colonial powers.

Still, the interim government of Venezuelan President Delcy Rodriguez has defended the agreement as a boon to her country’s beleaguered economy. The National Assembly, led by her brother Jorge Rodriguez, voted to back the measure on Tuesday.

“Support for the binational energy treaty between the Bolivarian Republic of Venezuela and the United States of America … is approved,” Jorge Rodriguez said.

But even within the National Assembly, there was pushback. Some opposition lawmakers abstained from the vote and denounced the fact that the terms of the agreement have yet to be published.

“We need and are obliged to know what is written in the fine print,” lawmaker Luis Emilio Rondon said, calling for “the full and complete text of what has been agreed”.

While details about the arrangement are still emerging, the deal is slated to give the US access to 65 billion barrels of proven oil reserves in Venezuela, about one-fifth of the country’s total.

As part of the deal, the US is expected to enter into a partnership with a private company to extract fuel from 17 large Venezuelan oil fields. The lease over the oil fields will run 100 years, according to reports.

The White House confirmed on Monday that it is partnering with North American Blue Energy Partners (NABEP), helmed by Venezuelan businessman Alejandro Betancourt who is a former ally of the late Venezuelan President Hugo Chavez.

The agreement would create a new company, wherein the US Defence Department would take a 35 percent ownership stake and the State Department would have the right to buy 20 percent of the oil produced at cost.

Betancourt has faced criminal investigations for alleged money laundering in Spain and Switzerland.

But a US official who spoke anonymously defended the partnership, arguing that Betancourt is not facing any criminal charges in the US.

“I’m not nominating anyone for sainthood here,” the official said. Instead, the official framed the deal as “a geopolitical opportunity to secure fields that primarily had largely been under the influence of Chinese and Russian companies”.

Asked about the possibility of democratic elections in Venezuela, the official said they were not feasible in the immediate future.

Periods of transition, the official added, “almost invariably requires you to work with elements of the existing structure, even as you are creating a new one”.

Separately, oil giant Chevron is expected to sign an agreement to expand operations in Venezuela on Wednesday.

Venezuela’s energy sector has become dilapidated, with critics blaming heavy US sanctions and government mismanagement.

While the Trump administration has pushed for greater international participation in Venezuela’s oil sector, some companies have expressed scepticism about investing there.

The 65-billion-barrel oil deal was announced on August 27 in a post on Trump’s Truth Social platform.

His administration has exercised increasing influence over Venezuela’s government, since it launched a January 3 military operation to abduct and imprison Venezuelan President Nicolas Maduro.

Trump and Maduro had frequently clashed. In the wake of Maduro’s abduction, Trump backed the socialist leader’s vice president, Rodriguez, to take over Venezuela’s government, holding her up as a model of cooperation.

Six months into the war on Iran, the largest US oil companies have posted their biggest profits since 2022, selling less oil at far higher prices. But the conflict is also putting their longstanding Gulf investments at risk, exposing the industry’s uneasy balance between wartime gains and mounting geopolitical vulnerability for investors worldwide.

Since the war began on February 28, Brent crude has risen about 22 percent, from $72 to $88 a barrel.

The Strait of Hormuz – through which one-fifth of the world’s oil and natural gas was shipped before the war – remains largely closed to commercial traffic, though Iran and Oman agreed last week on a temporary maritime route. Iran says the strait will not fully reopen until the United States fulfils its commitments under a lapsed interim peace deal, leaving longer-term security and management arrangements unresolved.

In the absence of a lasting resolution, the disruption is likely to continue supporting higher energy prices and creating windfalls for producers, despite placing energy companies’ regional assets and future projects at greater risk.

Rahul Choudhary, vice president of Upstream Research at Rystad Energy, an independent energy research company, said the conflict has already reduced the amount of oil and gas US energy firms are drawing from the Gulf region.

“Overall we expect US companies’ share of gas supplies [from the region] to fall by around 40 percent this year compared to last year [and] the share of oil supplies to drop by 30-35 percent,” he told Al Jazeera.

While higher commodity prices have helped offset the immediate financial impact, Choudhary said prolonged disruption is likely to delay major projects and weigh on the future growth plans of US oil and gas companies with a presence in the region.

Who has profited?

The surge in the oil price since early March, when Iran first closed the Strait of Hormuz, has delivered a windfall for oil companies, but gains have been tempered by challenges in the Gulf.

Chevron has limited exposure to Arab Gulf supply disruptions, with the region accounting for just 5 percent of its total global output. The group reported its highest quarterly profit in six years of $12bn in adjusted earnings on July 31.

ExxonMobil, by contrast, has been far more exposed to disruption in the Middle East, with the closure of the Strait of Hormuz and Iranian attacks on US-linked infrastructure in the region affecting its operations in Qatar and the United Arab Emirates (UAE), which together account for 20 percent of its global equity upstream supply, according to Choudhary.

“We already saw in H1 [the first half of] 2026, the company’s upstream earnings dropped by around $1.3bn compared to H1 2025, due to lower upstream volumes from the Middle East. However, the shortfall was covered well by higher commodity prices,” Choudhary said.

The contrast highlights a broader divide between those US energy companies which have benefitted from tighter global supply – and the corresponding rise in the oil price – and those with assets, partnerships or operations in the Gulf at greater risk of disruption caused by recent attacks on energy facilities.

Where are US energy companies exposed in the Gulf?

The Gulf’s energy sector is dominated by state-owned giants such as Saudi Aramco, Abu Dhabi National Oil Company (ADNOC) and QatarEnergy.

Although these national oil and gas companies retain control over the region’s reserves and core infrastructure, US energy firms have carved out strategic positions across the region.

US companies generate revenue through stakes in production assets, joint ventures, production agreements, refining and petrochemical projects, as well as through long-term contracts to provide equipment, engineering and operational expertise.

ExxonMobil has some of the largest US commercial interests in the Gulf.

The company has been a major partner in Qatar’s LNG sector for decades, holding stakes in several QatarEnergy LNG joint ventures linked to the expansion of the North Field. The field is the Qatari section of the North Field-South Pars structure, the world’s largest natural gas field, which Qatar shares with Iran, where it is known as South Pars. ExxonMobil also holds an interest in the UAE’s Upper Zakum offshore oilfield alongside ADNOC.

Similarly, ConocoPhillips joined the North Field East (NFE) and North Field South (NFS) expansion projects with QatarEnergy in 2022 to increase export capacity at Ras Laffan.

The US group, Occidental Petroleum, has become one of the largest foreign producers in Oman, operating the Mukhaizna heavy oilfield, the country’s biggest producing oilfield. It also holds interests in UAE gas and pipeline projects.

Chevron maintains a smaller but strategically important Gulf footprint. Through Saudi Arabian Chevron, the company operates oil assets in the Saudi-Kuwait Partitioned Zone, including the Wafra field. In July, it said it was exploring potential routes to move Iraqi crude to Mediterranean export terminals, which could reduce reliance on the Strait of Hormuz.

Where have attacks on energy facilities taken place?

According to the Armed Conflict Location and Event Data (ACLED), a US-registered independent conflict monitor, Iran and Iran-backed groups in the region have carried out at least 172 attacks on nonmilitary infrastructure across the six Gulf Cooperation Council (GCC) countries since the US and Israel launched their war on February 28.

Energy infrastructure has been hit hardest, with oil and gas facilities, along with power plants and desalination plants, accounting for nearly half (48 percent) of all strikes on nonmilitary targets.

The UAE, Kuwait and Bahrain have suffered the highest number of successful strikes, with the majority aimed at oil and gas facilities.

Among the sites that have been struck are Kuwait’s Mina Abdullah and Mina al-Ahmadi refineries, the Bahrain Petroleum Company oil refinery, and ADNOC’s al-Ruwais Industrial City and the Habshan gas complex.

There have also been several strikes on Saudi Aramco facilities, most recently a drone strike on July 27 on the Abqaiq processing complex, one of the most critical nodes in Saudi Arabia’s oil infrastructure, processing more than seven million barrels of oil per day.

Nasser Khdour, Middle East assistant research manager at ACLED, said: “Oil and gas facilities, power plants and water desalination plants are likely to remain key targets for Iran because disruption to these sectors can increase economic pressure on Gulf states, while disruption to global energy supplies increases prices and pressure on the US during periods of escalation.”

In March, a drone attack close to the Saudi Aramco-ExxonMobil SAMREF refinery in Yanbu disrupted oil loading at the city’s Red Sea port. While the attack had only minimal operational impact, it highlighted the vulnerability of US-linked energy assets in the region.

Qatar’s Ras Laffan Industrial City, the world’s largest LNG export hub, which hosts major joint ventures between QatarEnergy, ExxonMobil and ConocoPhillips, also came under repeated attack in March, at one point forcing the plant to halt production entirely. In June, an explosion as a result of a “technical malfunction” on Qatar’s Barzan gas project, where ExxonMobil holds a stake, killed at least 13 people.

“In terms of gas assets being impacted, major blows have been [dealt to] companies [that are] part of LNG projects in Qatar: ExxonMobil and ConocoPhillips,” Choudhary said.

He added that ExxonMobil’s share of LNG supply from Qatar is expected to fall significantly this year to about four million tonnes compared with 13 million tonnes last year, while ConocoPhillips has also experienced reduced volumes to one million tonnes this year compared with 2.5 million tonnes last year.

The attacks on Qatar’s LNG infrastructure could have longer-term consequences. Damage to LNG trains at Ras Laffan could take years to repair, according to QatarEnergy, while delays to Qatar’s North Field expansion projects could push back planned supply growth.

“The attack on LNG trains 4 and 6 at Rasgas damaged roughly 13 million tonnes of capacity, which will take anywhere between three to five years to come back online with a total repair cost estimate of around $3bn,” said Choudhary.

He added that the second most impacted gas project has been the Shah gas project in the UAE, in which Occidental Petroleum has a 40-percent stake and where drone attacks in March caused a fire at the gas plant that halted operations.

The conflict has also affected ExxonMobil’s oil interests in the UAE, Choudhary said. Production from Upper Zakum, where ExxonMobil has a 28 percent stake, was reduced between March and May when export routes were disrupted, limiting the ability to move offshore crude.

Beyond the UAE, the most significant impact on US companies’ oilfield operations played out in Iraq. A drone attack hit the Sarsang oilfield in March, followed by an explosion at one of its storage facilities in April, together causing damage to the field.

Looking ahead, Choudhary said higher prices could support cash flows, but prolonged conflict risks could threaten future growth. ExxonMobil’s $10bn Upper Zakum and Qatar LNG expansions could face delays, while ConocoPhillips remains exposed through investments in higher-risk markets, including its planned 42-percent stake in BP’s Kirkuk operations in Iraq.

“For companies like Chevron and Occidental Petroleum, whose presence are in less volatile countries like Israel and Oman respectively, the impact of escalations will not be as severe, as we have not seen significant disruption in these countries,” said Choudhary.

US oilfield service companies in the Gulf

Oilfield service giants, including US firms SLB (formerly Schlumberger), Halliburton and Baker Hughes, provide drilling technologies, equipment and operational expertise across the Gulf, supporting Saudi Aramco, ADNOC and QatarEnergy.

For oilfield service companies, the outlook is mixed, according to Chinmayi Teggi, energy research analyst at Rystad Energy, a research group. While higher oil prices and energy security concerns could lift demand over time, near-term margins remain under pressure from higher logistical costs, supply-chain disruptions and delayed projects.

“For the Big Three (SLB, Baker Hughes and Halliburton), the conflict continues to weigh on regional revenues,” Teggi told Al Jazeera, adding that second-quarter Middle East revenues were down 8-10 percent compared with the previous year across the three companies, while higher oil prices meant revenues were higher in other geographies.

However, a recovery in suspended operations and production could help drive growth into 2027.

For US companies, therefore, the Gulf remains both an opportunity and a risk.

“The impact on US companies will depend on the extent of exposure and countries in which these companies are present,” Choudhary said.

Their investments have secured US access to some of the world’s most important oil and LNG projects, but the conflict has exposed the risk of operating in a region where energy infrastructure has become increasingly vulnerable to geopolitical conflict.

US President Donald Trump has repeatedly warned Iran against restricting access to the Strait of Hormuz, arguing that the waterway must remain open to global commerce.

But for companies with billions of dollars invested across the Gulf, the challenge isn’t just about keeping shipments moving – it is ensuring the infrastructure remains secure, they say.

US president says deal secures majority US control of more than 65 billion barrels of proven oil reserves in Venezuela.

The United States has struck a deal with Caracas that would give them control of some 65 billion barrels of Venezuela’s proven oil reserves, President Donald Trump has announced, while reviving the OPEC nation’s battered energy industry.

In a post on Truth Social, Trump said the “historic transaction more than doubles American oil reserves” and “will substantially lower gas prices for all Americans”.

“At my direction, Secretary of State Marco Rubio, and Secretary of War Pete Hegseth, working closely with Highly Respected Interim President of Venezuela, Delcy Rodriguez, and, through a partnership with private business, have secured majority US control of more than 65 BILLION BARRELS of proven Oil Reserves in Venezuela, at no cost to the American Taxpayer,” Trump wrote.

Venezuela’s interim President Delcy Rodriguez welcomed the deal, which is expected to bring about $209bn to the state’s treasury.

The announcement followed weeks of negotiations over an agreement that would give American companies long-term access to a group of Venezuelan oilfields and guarantee the resulting crude supply to the US.

Venezuelan officials are preparing to sign agreements next week granting new oil exploration and production rights to a number of companies, particularly US firms.

Sources previously told Reuters news agency that a lease model was under consideration, with fields potentially auctioned to US producers, but the arrangement could face legal and constitutional challenges in Venezuela, where the state retains control over core oil industry activities.

The new deal would represent a dramatic expansion of Washington’s role in Venezuela’s oil industry as the Trump administration seeks to revive the country’s production and secure more crude for US refineries. Venezuela holds the world’s largest proven oil reserves, but produces only 1.25 million barrels per day, far below its potential after years of underinvestment, mismanagement and sanctions.

Trump did not disclose the structure of the agreement, the fields or companies involved, nor how the US would exercise majority control over the reserves.

Secretary of State Marco Rubio described the agreement as a win for both countries, saying on X that it would secure stable, low-cost oil for the US and help lower petrol prices.

For Venezuela, Rubio said the deal would bring nearly $100bn in private investment, support thousands of high-paying jobs and help rebuild the country’s economy.