No country was better prepared for a war with Iran than China. While the rest of Asia suffers from oil and gas supply shortages as a result of the war, Beijing appears to be in a comfortable position thanks to its massive crude oil reserves and its enormous clean energy infrastructure.

Over the past years, China has worked to develop its domestic clean energy sector at a faster pace than any other country in the world. At the same time, it has stockpiled large quantities of surplus oil and gas in anticipation of a major geopolitical disruption like the one the world is currently witnessing. As a result, China's ability is not only limited to weathering the current global energy crisis better than any other country, but it may also emerge from it stronger and more capable of consolidating its position on the international stage.

Under normal circumstances, about one-fifth of global oil and gas supplies pass daily through the Strait of Hormuz, which connects the Arabian Gulf to the Gulf of Oman and the Arabian Sea, making it a vital corridor for transporting energy from the oil-rich Middle East to global markets, especially buyers in Asia. However, this flow has now largely declined, pushing world leaders to urgently seek alternative energy sources.

This disruption — which is considered the largest of its kind in world history — is likely to push the global transition toward clean energy to accelerate significantly, as the sharp rise in oil and gas prices will make wind and solar energy more competitive and less expensive compared to fossil fuels. Forbes magazine mentioned earlier this month: "For many years, clean energy was promoted as a moral necessity, but now it has simply become an economic and geopolitical necessity. It is no longer just about emissions, but about resilience and price stability."

This development is positive news for China, which has worked for years to strengthen its global dominance in the field of clean energy, as part of its quest to become the world's first "electric state" that relies broadly on clean energy and electricity in its economy. It is likely that the acceleration of the global transition toward clean energy will depend heavily on Chinese supply chains, as Beijing currently controls the largest share of the world's production of solar panels, wind turbines, batteries, and electric vehicles.

Yang Peking, an analyst specializing in Chinese affairs from the energy think tank Ember based in London, said in statements recently reported by the Washington Post: "This is part of a long-term trend and not just an immediate response to rising oil and gas prices. Energy security has become increasingly important on government agendas, and the transition toward clean energy is increasingly seen as a means to enhance energy security."

This shift is likely to play significantly into China's interest, especially in light of the United States — Beijing's largest economic competitor — moving away from the clean energy sector during the administration of President Donald Trump. While Trump described support for clean energy as a threat to national security, China used government subsidies for green energy to transform itself into a clean energy superpower that the world cannot ignore or do without dealing with, especially amidst growing concerns over inflation and recession resulting from the war with Iran and the energy crisis looming on the horizon as a result.

Increasingly, it seems that the world's two largest economies are engaged in what resembles an "energy war": one country heading toward a future based on electricity and clean energy on one hand, and a country relying on traditional fossil fuels on the other.

Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute, told the Washington Post: "In the future energy system, geopolitics play a role no less important than the economic choices of countries. It is no longer limited to choosing between fossil fuels and green energy, but has become to some extent a choice between two camps in the world and how countries position themselves within this divide."

At the same time, China continues to strengthen its strategy in the energy sector that placed it in this strong strategic position. Although clean energy is a fundamental element in this strategy, assuming that China is fighting a pure climate war would be an oversimplification. Chinese President Xi Jinping has called for accelerating the planning and construction of a new energy system that maintains an "all options are available" approach to ensure the country's energy security, including expanding the role of hydropower and nuclear energy, along with continued reliance on coal, which is the most polluting type of fossil fuel.

Xi said: "The path we followed when we were among the first countries to develop wind and solar energy has proven to be a forward-looking path." He added: "At the same time, coal-fired power plants still form the basis of our energy system and must continue to perform their supporting role."

Main indices on Wall Street retreated slightly on Thursday after rising in the previous session, with doubts remaining over the future of the two-week truce in the Middle East, which kept investor risk appetite limited at a time when investors are analyzing inflation data that came in line with expectations. 

U.S. President Donald Trump pledged to keep American military assets in the Middle East until a peace agreement is reached with Iran, warning of a major escalation if Tehran does not comply with the agreement. 

At the same time, Israel bombed more targets in Lebanon, while Iran warned that there would be no agreement if Tel Aviv did not stop its bombing of the country. 

The absence of clear signs of a resumption of ship movements through the Strait of Hormuz also led to increased uncertainty regarding energy shipments, pushing oil prices higher again, despite remaining below the level of $100 per barrel. 

Market sector performance

The energy sector in the S&P 500 index rose by 1.3%, while utility stocks were among the biggest gainers with a rise of 1.6%. 

Charlie Ripley, senior investment strategist at Allianz Investment Management, said: "The move from the brink of continuous escalation with Iran to a more diplomatic approach helped calm markets to some extent." 

By 10:04 AM Eastern Time: 

- The Dow Jones Industrial Average fell by 48.96 points or 0.11% to 47,856.44 

- The S&P 500 decreased by 5.15 points or 0.09% to 6,777.00 

- The Nasdaq Composite retreated by 45.85 points or 0.21% to 22,585.96 

Pressure on technology stocks

Technology stocks were the most influential on the S&P 500 index, as Microsoft shares fell by 1.7% and Apple by 0.7%. 

Software stocks also came under pressure, as the iShares Expanded Tech-Software ETF declined by 3.3%. 

In contrast, consumer discretionary stocks supported gains for Amazon stock, which rose 1.7% after the company's CEO said that AI services in its cloud computing unit are achieving annual revenues exceeding $15 billion. 

The S&P 500 and Nasdaq indices had recorded their largest daily gains in more than a week on Wednesday after global markets welcomed the two-week truce agreement, while the Dow Jones index recorded its largest rise in a year. 

U.S. economic data and interest rate expectations

Data showed that inflation in the United States rose as expected in February, and is likely to rise further in March due to the war with Iran, while economic growth slowed in the fourth quarter more than previously estimated. 

Ripley said that this data "does not change much of the picture for the Federal Reserve, as inflation pressures remain high, which may push it to keep interest rates unchanged at the moment." 

Investors are expected to focus on Consumer Price Index data for March scheduled for release on Friday to see the impact of rising oil prices resulting from the conflict. 

According to data compiled by LSEG, money market participants expect only about a 30% probability of cutting interest rates by 25 basis points by the end of 2026, compared to a 56% probability just one day ago. 

Markets were expecting two interest rate cuts this year before the outbreak of the war, while bets on the possibility of a rate hike in December also rose during the conflict period. 

Company movements

Among the most prominent stock movements: 

- Constellation Brands stock rose by 5% after the maker of Corona beer announced a decline in fourth-quarter sales that was less than expected. 

- Applied Digital stock fell by 7.1% after the data center operator's third-quarter loss widened compared to last year. 

At the market level, declining stocks outnumbered advancing ones by a ratio of 1.15 to 1 on the New York Stock Exchange, and by 1.59 to 1 on the Nasdaq. 

The S&P 500 index recorded 37 stocks at a 52-week high against 16 stocks at a low, while the Nasdaq Composite recorded 64 stocks at an annual high and 84 stocks at an annual low.

Copper prices declined on Thursday as doubts escalated over whether the truce between the United States and Iran would hold, which reinforced concerns regarding global economic growth and the demand for industrial metals, according to traders. 

The benchmark copper price on the London Metal Exchange fell by 0.9% to reach $12,586 per metric ton by 09:18 GMT. 

The metal used in the energy and construction sectors had recorded a three-week high at $12,755.50 on Wednesday after the announcement of a two-week truce agreement in the Middle East, which sparked optimism that shipments through the Strait of Hormuz could resume soon. 

High oil and large inventories pressure prices

High oil prices are also expected to negatively impact economic growth by fueling inflation and weighing on spending. 

Furthermore, high copper inventories in warehouses registered with the London Metal Exchange and Comex — which exceeded 900,000 tons — are pressuring prices, representing double the level recorded since the beginning of the year. 

Morgan Stanley analysts said in a note that global copper inventories, including U.S. inventories, appear high on paper. 

But they added that metal located in the United States is unlikely to be re-exported, even if tariffs are not ultimately implemented, considering that these inventories have practically begun to behave like a strategic reserve. 

The rise in inventories has led to a significant discount in spot contracts compared to three-month contracts on the London Metal Exchange. 

Aluminum disruptions in the Middle East

Elsewhere, disruptions to aluminum shipments from the Middle East are behind the price premium for spot aluminum contracts on the London Metal Exchange compared to three-month contracts. 

During the past week, this premium rose to more than $70 per ton, which is the highest level since 2007. 

The Middle East produced about seven million metric tons of primary aluminum last year, equivalent to 9% of global supplies, which are expected to reach about 75 million tons this year. 

Movements of other industrial metals

The rest of the industrial metals saw mixed movements, as: 

- Aluminum for three-month contracts rose by 0.5% to $3,471 per ton 

- Zinc declined by 0.2% to $3,287 

- Lead fell by 0.5% to $1,932 

- Tin dropped by 1.8% to $46,790 

- Nickel declined by 0.4% to $17,235 per ton

Bitcoin price rose to a weekly high of $72,698 on Tuesday following reports of a two-week truce agreement between the United States and Iran. 

But the world's largest digital currency has retreated since then, and the recovery may become at risk with the emergence of new macroeconomic pressures. 

Bitcoin jumped by 6% in less than four hours on Tuesday, in line with the recovery in global stock markets after the two warring parties reached a two-week truce agreement. 

The increasing correlation between Bitcoin and S&P 500 futures showed that the digital currency's rise was largely driven by the prospect of reopening the Strait of Hormuz, which calmed fears of a broad shock in global supply chains. 

But the rise stopped at the $72,000 resistance level, leading to a major liquidation event in Bitcoin futures contracts, where more than $150 million of long positions were liquidated. 

Truce violations may ignite a wave of panic

U.S. President Donald Trump said that the Iranian nuclear program will be disabled in exchange for easing tariffs and sanctions. 

But the bears' stance toward Bitcoin was strengthened after U.S. Vice President JD Vance described the truce as a "fragile truce." 

After that, reports emerged stating the repeated violation of the terms of the agreement in the Levant region, after Israel launched a military operation it called Operation Eternal Darkness targeting underground infrastructure belonging to Hezbollah in Lebanon. 

Israel says that the truce with Iran does not include its operations against Hezbollah, emphasizing its strategic independence, while Pakistan, which mediated the temporary agreement, says that the deal was conditional on a broader cooling of tensions in the region. 

On April 8, the Speaker of the Iranian Parliament said that the U.S. administration violated the spirit of the agreement's roadmap. Iran also threatened to resume its strikes if the attacks on its allies were not stopped immediately. 

While a sustained de-escalation could lead to lower oil prices and reduced global inflationary pressures, any new escalation could be more financially damaging, especially since Bitcoin's technical structure remains fragile. 

Bitcoin faced difficulty in exceeding the $70,000 level during the past week, and if it loses this level again, it may retest the psychological support level at $64,000. 

Federal Reserve minutes increase ambiguity regarding interest rates

The Federal Reserve released on Wednesday the minutes of its recent Federal Open Market Committee (FOMC) meeting held on March 17 and 18, which ended with an 11-to-1 vote to keep interest rates between 3.5% and 3.75%. 

Although the official narrative indicates the possibility of cutting interest rates this year, the minutes revealed a consensus to move only if inflation does not spiral out of control due to rising energy costs. 

Normally, cutting interest rates is considered a positive factor for digital currencies, but any signs of uncertainty or the possibility of postponing the cut may negatively affect sensitive markets such as the cryptocurrency market. 

While some officials expressed optimism about the possibility of cutting rates soon, others warned that the opposite might be necessary to curb persistent price growth. 

This ambiguity may add another obstacle for Bitcoin during a period characterized by volatility. 

According to the CME Group tool known as FedWatch, markets are pricing a 75.6% probability of keeping interest rates within the current range between 3.5% and 3.75%. 

According to the latest update, the price of Bitcoin was trading slightly above $70,900 after falling by 1.2% during the past twenty-four hours.