There is one event between now and April 1 that oil traders are pricing more carefully than any military development: the Trump-Xi summit scheduled for March 31. Trump has suggested the trip could be called off depending on Beijing's decision on the deployment of warships to the Strait of Hormuz.
This is not a diplomatic sidebar. It is the central variable in the oil market for the next two weeks. Here is the scenario analysis.
Scenario 1 — Summit Happens, China Commits to Coalition
Probability: Low but not negligible. China would demand significant concessions — likely on tariffs, Taiwan, or both — in exchange for joining a U.S.-led military coalition. If a deal is struck, the signal to oil markets is immediate and powerful: Hormuz reopening is now a matter of logistics, not politics. WTI falls $12–18/bbl within 48 hours of the announcement. The national gas average retreats $0.30–0.45 over the following 3–4 weeks. This is the relief scenario.
Scenario 2 — Summit Happens, China Commits to Nothing
Probability: High. China attends for trade reasons — the bilateral economic relationship is too important to sacrifice — but deflects on Hormuz with language about "all parties ceasing hostilities." Markets interpret this as the status quo continuing. WTI stays in the $95–105 range. Gas prices continue their gradual climb toward $4.00. No relief, no acceleration.
Scenario 3 — Summit Is Cancelled
Probability: Moderate and rising. If Trump cancels, markets read it as a signal that the U.S.-China relationship has materially deteriorated — adding a new geopolitical risk premium on top of the existing Hormuz premium. WTI spikes $8–12/bbl immediately. The national gas average, which would likely be around $3.85–3.90 by March 31 at current trajectory, crosses $4.00 within days of a cancellation announcement. This is the worst-case scenario for American consumers in the near term.
Scenario 4 — China Cuts a Bilateral Deal With Iran Instead
Probability: Moderate and the most underappreciated risk. China quietly negotiates its own selective passage arrangement with Iran — similar to what India and Pakistan have done — and announces it without joining the coalition. This scenario is bullish for Chinese energy security and bearish for U.S. consumers simultaneously. It eliminates China's incentive to join any coalition and signals to other neutral nations that bilateral deals are the model. WTI and Brent stay elevated. The two-tier Hormuz becomes permanent architecture rather than a temporary crisis measure.
What to Watch
The tell will come before the summit itself. If Chinese state media begin reporting "productive communications" on energy and trade in the week of March 23–28, Scenario 1 or 2 is likely. If Trump posts on Truth Social about China "not playing ball" before March 28, Scenario 3 is coming. A quiet Bloomberg or Kpler report about Chinese-flagged tankers transiting Hormuz without fanfare signals Scenario 4.
Get the weekly update every Thursday — we track every signal.
— K. Lorraine, The Hormuz Effect
Sources: Reuters (March 16, 2026) · NPR (March 16, 2026) · NBC News (March 16, 2026) · EIA Short-Term Energy Outlook (March 10, 2026) · AAA Fuel Gauge Report (March 16, 2026)
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