Middle East Ceasefire Temporarily Holds, Global Economy Struggles to Return to Pre-War Normalcy

Ask AI · Why did Trump agree to a ceasefire before the military deadline?

“I agree to pause bombing and attacks on Iran for two weeks.”

On the evening of April 7th, local time, U.S. President Trump posted on social media, giving the world a sigh of relief.

Iran subsequently confirmed. In the early morning of April 8th, local time, Iran’s Supreme National Security Council issued a statement saying they accepted the ceasefire proposal mediated by Pakistan.

According to a senior U.S. White House official, Israel also agreed to suspend bombing operations during the negotiations.

The movements of the three parties seem to herald a glimmer of peace.

Capital markets responded quickly. International oil prices plummeted sharply during trading, with WTI crude futures dropping over 19% at one point, and Brent crude futures falling more than 16%; gold and silver remained resilient at high levels, with London gold surging over 3% during the session and London silver rising nearly 6%.

“From a short-term impact perspective, the decline in oil prices will be more obvious than gold,” said Wang Lei, an assistant researcher at the Institute of World Economics and Politics, Chinese Academy of Social Sciences. The temporary ceasefire and the expectations for negotiations on April 10th will primarily reduce the “Hormuz Strait blockade premium” previously factored into oil prices. Gold may not fall as sharply and could oscillate at high levels because the market is still trading on the “fragility of the ceasefire” and subsequent uncertainties.

Interestingly, just a few hours before the ceasefire news broke, Trump had issued a harsh statement saying “civilization will perish.” Why did his attitude suddenly change overnight?

Analysts believe it’s mainly due to the approaching U.S. military deadline, Pakistan’s mediation, the achievement of military objectives, combined with domestic anti-war pressures and election considerations.

“If the conflict cannot be resolved quickly, the U.S. will struggle with prolonged consumption,” said Bai Ming, a researcher at the Ministry of Commerce’s Research Institute. Trump’s resources are not unlimited, anti-war forces are gathering domestically, and the Democratic Party will also exert pressure. If not handled well, the possibility of losing the midterm elections will increase.

Upon closer inspection, the ceasefire is far from optimistic.

Iran quickly announced a “10-point plan,” emphasizing that they would only accept ending the war after details are finalized based on Iran’s proposed “10-point plan.”

Some of these points are quite tough. For example, coordinating with Iranian armed forces to control passage through the Hormuz Strait; releasing all frozen Iranian assets and properties abroad.

Although Trump said he “received Iran’s 10-point proposal and considers it a feasible basis for negotiations,” he also set conditions: “completely, immediately, and safely opening the Hormuz Strait,” and a bilateral ceasefire.

The gap between these “red lines” is clearly visible.

“Regardless, the Persian Gulf will not be peaceful in these two weeks,” Bai Ming pointed out. Undoubtedly, the ceasefire is for negotiations; if they succeed, it could become a permanent ceasefire, but if not, both sides will continue fighting. Whether the ceasefire can be sustained ultimately depends on the gains and losses both sides weigh during the pause.

Wang Lei also believes that this ceasefire has some value but is fragile and carries significant risks of recurrence. The reason is that it appears more like a “temporary window” for negotiations rather than a fundamental reconciliation, and there’s a possibility of “talking while fighting” or localized escalation afterward.

For the global economy, the pressing issue is: even if the ceasefire continues, can it return to pre-war levels?

Bai Ming frankly says it’s quite difficult. Even if the ceasefire persists, international commodity trade and shipping cannot fully recover, at best slightly better than during wartime. In the long run, whether Iran can regain normal trade opportunities, lift sanctions, and unfreeze assets still depends on a prolonged game; neither talks nor military action alone can achieve results.

Wang Lei’s assessment is similarly pessimistic. If the ceasefire continues, the global supply chain will breathe a sigh of relief, but it will not return to pre-war normalcy. Enterprises, insurers, and importing countries’ perceptions of Middle Eastern risks have already changed, and future arrangements are more likely to shift toward “higher inventories, stronger redundancies, and more diversified sources.”

In other words, even if the ceasefire persists, the global energy and shipping systems are likely to maintain a “high-cost, low-efficiency, heavily backup” new normal for some time.

Will the Persian Gulf be peaceful again in two weeks? No one dares to promise. But what is certain is that regardless of the negotiation outcome, the course of the global economy has already turned a corner. This turn is unlikely to revert in the short term.

(“Sanlihe” Studio)