Middle East Situation Brief | May 4

A subtle shift has emerged in the standoff between the United States and Iran. Iran throws Trump a 14-point “final-war plan,” making a key concession on the nuclear issue—no longer insisting on lifting the Hormuz Strait blockade before face-to-face negotiations. Trump, on the other hand, threatens to “possibly resume airstrikes,” while promising to review it as soon as possible. The Strait of Hormuz sees the first VLCC break through, and the first land-based alternative route is activated; Israeli forces kill 13 Lebanese civilians in one day and demolish a monastery, while the Gaza ceasefire is effectively rendered meaningless.

## 1. U.S.-Iran Negotiation Stalemate: The Game Over the 14-Point “Final-War Plan” Escalates

On May 4, U.S.-Iran talks continue to unfold as a dual-track game—diplomatic on one front and military on the other. Through mediation by Pakistan, Iran submitted the latest negotiation proposal to the U.S., with a total of 14 points. The proposals focus on “ending the war,” calling for all issues to be resolved within 30 days. The priorities include: ensuring military invasions will not be repeated, U.S. troops withdrawing from areas surrounding Iran, lifting the maritime blockade, unfreezing Iranian assets, paying compensation, canceling sanctions, achieving peace on all fronts (including Lebanon), and establishing a new management mechanism for the Strait of Hormuz.

In the plan, Iran shows flexibility on the nuclear issue—no longer demanding the lifting of the Hormuz Strait blockade before face-to-face negotiations. External observers interpret this as an important concession signal from Tehran. However, Trump reacts coolly. In a social media statement, he said it is “difficult to imagine that the plan can be accepted,” that “Iran has not yet paid a sufficient price for what it has done,” and warned that there is a “possibility of the U.S. resuming airstrikes.” At the same time, he said he will study Iran’s submitted proposal as soon as possible. The White House’s likely stance of being “not satisfied” with the plan will probably persist.

Iran’s Deputy Foreign Minister Garibabadi said clearly that the plan has been put forward—“the ball is on the U.S. side”—but Tehran is prepared for “both options.” A senior military official warns that the U.S.-Iran conflict may break out again, and that armed forces have made full preparations. On Israel’s side, Prime Minister Benjamin Netanyahu convenes a security cabinet meeting to discuss Iran and the situation in Gaza. The IDF Chief of Staff coordinates with the commander of U.S. Central Command on “all possible scenarios,” while Israel accelerates its preparations on two fronts.

## 2. Trump’s Two-Pronged Moves: Airstrike Threats and Diplomatic Review Proceed in Parallel

On May 4, Trump continues to implement the strategy of “grabbing the two hands—threat and diplomacy” on Middle East issues. On one hand, he strengthens military pressure on Iran in public statements. In a weekend statement, he said there is a “possibility that the U.S. could restart airstrikes against Iran,” and that “I have choices regarding both military escalation and reaching an agreement, but I would prefer to reach an agreement.” On the other hand, he promises to review Iran’s latest plan promptly and also informs Congress through an official letter that Iran-related hostile actions ended in April. Trump has also received the latest briefings from U.S. Central Command on military options. In his remarks, a contradictory posture is evident—unwilling to launch a war in a rush while refusing to make concessions.

## 3. Strait of Hormuz: Iran Upgrades Regulatory Control, and Land-Sea Alternative Routes Begin to Operate

On May 4, the Strait of Hormuz shows a dual-track situation under strict control, with “legalized regulation” and “breakthrough passage” running in parallel.

Iran is shifting the strait’s control from on-the-spot measures toward standardization and legalization. On May 3, local time, the chairman of Iran’s civil affairs committee in parliament announced that parliament is pushing forward the “Hormuz Strait Management Law.” Under this plan, all transit must obtain permission from Iran. Any cargo belonging to Israel is not allowed to pass under any circumstances. Meanwhile, hostile countries at war with Iran also may not pass until compensation for losses is paid.

On the same day, a deputy director of Iran’s Trade Promotion Organization said that, due to severe threats to southern maritime security after hostilities broke out, Iran is studying more than 8 trade alternative channels or routes. Breakthroughs in air and sea are happening simultaneously. An ultra-large tanker belonging to Iran’s National Iranian Tanker Company carries more than 1.9 million barrels of crude oil (worth nearly $220 million) and has “evaded” U.S. Navy tracking, heading toward Indonesia’s Riau Islands. In Iraq, after 13 years, 70 crude oil tanker trucks enter Syria from Iraq via the Al-Bukamal border crossing. This is an important alternative land route for Iran’s camp to bypass the strait blockade. The U.S. military has also launched countermeasures underwater—U.S. forces will sign a contract with an artificial intelligence company to use AI technology to detect mines in the Strait of Hormuz.

## 4. Lebanon-Israel Border: The Ceasefire Is Close to Meaningless, and Israeli Attacks Continue to Escalate

On May 4, the ceasefire along the Lebanon-Israel border is virtually nonexistent. In its latest briefing, Lebanon’s Ministry of Public Health reported that since fighting reignited on March 2, Israeli attacks on Lebanon have killed 2,659 people. On local time May 2, Israel launched multiple rounds of airstrikes on places in southern Lebanon such as Nabatyeh, Sidon, and Tyre. In one day, at least 13 people were killed, including a child. On the same day, Hezbollah in Lebanon fired rockets and drones loaded with explosives at Israeli soldiers stationed there, causing no casualties.

Israeli airstrikes have also led to serious damage to humanitarian conditions and cultural heritage. According to an official Lebanese report, the IDF used bulldozers to demolish part of a Catholic monastery in border villages in southern Lebanon. The IDF argued that its target was a Hezbollah stronghold and that no religious facility signage was found at the building. The incident sparked controversy across multiple countries. Since the 10-day temporary ceasefire took effect on April 17, Trump announced on April 23 that it would be extended by three more weeks. However, Israel has continued to carry out attacks, citing that “Hezbollah violated the ceasefire agreement,” making the ceasefire effectively meaningless. A total of 11 countries including Turkey, Brazil, Jordan, Pakistan, Spain, and Malaysia issued a joint statement condemning Israel.

## 5. Yemen Houthi Armed Forces: 1,260 Ships Risk an Attempt to Pass Through the Bab el-Mandeb Strait in March

The Houthis’ threat to the Red Sea’s Bab el-Mandeb Strait is still ongoing, and shipping data further reveals the real risks and the latest trends on the Red Sea route. According to Lloyd’s List, in March more than 1,260 ships risked passing through the strait, reaching a new high in the five months since the Houthis escalated their attacks in January 2024. The number of transits for the month rose sharply by about 19% to 21% compared with February. Shipping companies are shifting from a strategy of “waiting and watching” to “continuing passage through risk.” Saudi Arabia is increasing exports via the Red Sea to the port of Yanbu. Using a 750-mile east-west oil pipeline built in the 1980s (as a strategy to avoid the Persian Gulf “oil tanker wars”), its recent average daily export volume is about 3.6 million barrels, equivalent to 20% of the average daily exports through the Hormuz Strait before the war.

However, even after Saudi rerouting and increased U.S. supply, the global supply of crude oil still faces a net daily shortfall of about 9 million barrels. More worryingly, even if the Strait of Hormuz resumes navigation tomorrow, Lloyd’s List estimates that ship passage volume will not return to normal until September. If mines are found inside the strait, the supply disruption could extend further to 2027.

The crisis in the Middle East is also creating chain reactions at a broader level. In the early hours of May 2, U.S. low-cost carrier Spirit Airlines announced the cancellation of all flights and a gradual shutdown of operations, marking the first representative casualty of soaring oil prices backfiring on the U.S. domestic economy.

## 6. Gaza Strip: Ceasefire Agreement Has Exceeded 200 Days—Long-Term Implementation Turns Into Talk

The Gaza ceasefire agreement has been signed for more than 200 days, but long-term implementation has turned into empty talk. On May 1 local time, Hamas issued a statement publicly accusing Israel of continuously violating the ceasefire agreement terms. Specific breach accusations include: continued military operations carried out under the guise of ceasefire; “hunger policies” toward the Gaza Strip; the Rafah crossing being closed for a long time or maintained only with symbolic opening; and unilateral efforts to change the battlefield boundary line by advancing the so-called “yellow line” in multiple locations.

Even more concerning is that Israeli intelligence sources show that, although the Gaza ceasefire is still being maintained, Israel is preparing to launch ground military operations in Gaza again. This is not an impossible option. The international community has also observed another dangerous trend under the ceasefire agreement—Israel has gradually expanded its de facto control range in Gaza, making the existing dividing lines under the ceasefire framework effectively meaningless. The de facto “yellow line” continues to move westward; Israeli-controlled areas have expanded to 59% of Gaza’s territory. Since the ceasefire, Israel’s continued actions in the Gaza Strip have caused at least 786 deaths, and prospects for peace remain bleak.

## 7. Energy Markets: Oil Prices Roil at High Levels—Focus on $105 as a Key Resistance Level

As of May 4, the Middle East situation’s support for international oil prices remains significant. WTI crude oil continues to trade in a high, fluctuating range above $100 per barrel, while Brent crude oil trades between $108 and $111 per barrel. Next week (May 4 to 10) will be a critical window when oil prices face a high-risk crossroads. $105 is WTI’s key upside resistance level. If it breaks through successfully, oil prices may accelerate higher toward even higher targets. If geopolitical factors ease, oil prices may retreat and test the $95 to $98 support range.

The supply side still faces severe pressure— even if the Strait of Hormuz fully reopens, it may take months for global inventories to recover. UN Secretary-General Guterres warned earlier that if the strait remains blocked through the middle of the year, global economic growth would fall to 2.5%, inflation would rise to 5.4%, and the number of people living in poverty would increase by 32 million.

## 8. International Response: China’s Ambassador Speaks Out; China, Russia, and the United Nations Coordinate in Multiple Ways

Against the backdrop of the continued deadlock in U.S.-Iran diplomatic games, multiple international forces have begun to coordinate and intervene together.

On the China side, starting May 1, China officially took on the rotating presidency of the United Nations Security Council for the month, with Middle East issues such as Palestine, Lebanon, and Syria set as core focus areas. Chinese Permanent Representative to the UN Fu Cong reiterated at a press conference that “the Palestinian issue is at the core of Middle East issues,” and said the Security Council should urge all parties, especially Israel, to fully comply with the Gaza ceasefire agreement and stop activities related to settlements. At the same time, it should send strong signals to uphold Lebanon’s sovereignty, security, and territorial integrity. When discussing the Strait of Hormuz issue, Fu Cong said that the most urgent task at present is to ensure that the ceasefire is maintained and that U.S.-Iran negotiations are restored in good faith, laying the groundwork for reopening the strait.

On the Russia side, Putin has recently indicated that he is willing to mediate to resolve the U.S.-Iran conflict.

On the United Nations side, on May 1 the UN Refugee Agency warned that the Middle East crisis has had a profound negative impact on global humanitarian supply chains. The prices for shipping major supplies have risen by nearly 18%, and the transportation costs for some aid supplies have more than doubled. It is expected that more refugees and displaced persons will be affected.

Summary: On May 4, the likelihood of peace in the Middle East remains slim. With diplomatic and military dual tracks continuing between the U.S. and Iran, Trump does not accept the 14-point plan, while Iran insists on bargaining over core issues. In the coming days, the U.S. side’s formal response will be a key turning point. The Lebanon-Israel ceasefire has been extended four times, but airstrikes and counterattacks on the front lines have never stopped. The two countries’ plans continue to hollow out; the Gaza ceasefire is more form than substance, and the humanitarian situation in Gaza continues to worsen. Under the triple pressure of international oil prices, food security, and regional systemic shocks, pricing of global supply chains and transportation costs are rising significantly.
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