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Before the meeeting between United States (US) President Donald Trump and China’s President Xi Jinping last week, there had been a sense that China might be incentivised to use its leverage over Iran to help force an end to the war by getting Iran to fold on US nuclear concerns. China purchases the great bulk of Iranian oil and thereby contributes close to half of Iran’s revenues, giving it a degree of veto power over Iranian affairs. That does not, openly at least, appear to have been an outcome of the meeting. US-Iran talks facilitated by Pakistan also appear to have deadlocked, with Trump calling Iran’s terms, especially on nuclear issues, “unacceptable”.

At the same time, domestic political pressure on the Trump administration is building ahead of the midterm elections scheduled for November. If Trump loses the House and the Senate, that will be a humiliating and ignominious blow to his presidency. Key Republican advisers and donors are also exerting pressure for an exit from the Iran war.

An honourable exit is doable, given that the US has materially achieved several parts of its stated and unstated war objectives. Iran’s nuclear capacity has been set back. Its drone and missile launch capacity has been set back too. The chaos at Hormuz has sparked a change in the global oil power balance from east to west, undoing much of the success achieved by the Organisation of the Petroleum Exporting Countries (OPEC) between 1960 and 1973. China has been sent a message that the US is prepared to go to extreme lengths to secure parity in the broader Indo-Pacific.

But the Trump administration is now under great pressure. The most useful measure of that pressure may be that US consumer sentiment has fallen to a record low. This is according to the University of Michigan Consumer Sentiment Index, which is one of the most closely watched measures of how ordinary Americans feel about the economy. In May it had an index score of 48.2, the lowest ever. It surveys households on their personal finances, buying conditions, inflation expectations, employment prospects, and broader economic confidence.

The index matters politically because consumer behaviour drives roughly two-thirds of the American economy. When confidence collapses, households tend to spend less, delay major purchases, and become more hostile towards incumbent governments. Historically, readings above 90 have generally been associated with strong economic optimism and politically stable periods. Readings between 70 and 90 are more mixed but still relatively normal. Once sentiment falls below 70, it has often coincided with economic stress, inflationary pressure, recession fears, or major geopolitical shocks – and thereby great domestic American political reversals.

The current reading of 48.2 places sentiment near some of the weakest levels recorded in modern American history. Comparable periods include the inflation and oil-shock crises of the late 1970s, the global financial crisis of 2008, and the inflation surge that followed the Covid period. In the run-up to the 2026 midterms, that is politically dangerous territory. Voters do not experience foreign policy through communiqués or summit language. They experience it through fuel prices, food prices, transport costs, and household budgets.

China is likely to understand this very well. Beijing has been under pressure as Hormuz oil flows stalled but it has also done well to circumvent the consequences. On balance it therefore likely judges that it has the space and opportunity to hold off on Iran if that would help to see Republicans lose the House and Senate in November. A wounded Trump administration would have less room for military adventures in the Indo-Pacific, less domestic authority to escalate trade and security pressure, and fewer options if Taiwan, the South China Sea, or regional alliances become the next arena of confrontation. A Democrat-controlled Congress is likely to be much more malleable than one dominated by Republicans and is more likely to take domestic policy decisions on energy, taxation, and the role of merit in society that would weaken US competitiveness broadly and thereby afford China a long-term advantage in the battle for global hegemony.

Iran has a parallel incentive. A Democratic-controlled Congress may be more hostile to Israel, with several Democratic lawmakers now openly opposing further arms transfers to the country. That gives Tehran an incentive to hold out without a deal in the hope that high energy prices deliver a Democrat-controlled Congress in November.

The pressure post the Trump-Xi meeting last week is therefore very much on Washington to engineer an exit from the Iran war before the conflict becomes a midterm millstone. Two options now appear to be under consideration to stage an exit point ahead of 4 July – which is the date by which this newspaper judges Republicans would like to see crashing gasoline prices against which to drive their midterm campaign.

The first is a second phase of Operation Epic Fury, a further bombing campaign designed to damage Iranian infrastructure to the point that Tehran is even less able to threaten its neighbours, US forces, or Gulf energy flows.

Kharg Island may be one of the targets in such an operation. The island is Iran’s main oil export terminal and is therefore one of the most important pressure points in the Iranian economy. It handles the bulk of Iran’s crude exports and sits at the centre of the oil flows that help fund the Iranian state, including its military, missile, drone, and proxy networks. Striking or disabling Kharg would therefore not just be a symbolic escalation. It would be an attempt to cut into Tehran’s hard-currency lifeline, weaken its ability to finance future offensive actions, and increase pressure on Iran to accept terms.

The second, related option is an operation to seize or remove the roughly 400kg of highly enriched uranium believed to remain central to Iran’s nuclear weapons threat. That uranium is likely in a deep, bombed-out bunker, and the US would need ground forces to control an area of Iranian territory before digging it out, loading it onto an aircraft, and making good their escape.

Either action would give the Trump administration a political exit ramp. It could claim that Iran’s military infrastructure had been set back, that the nuclear threat had been materially reduced, and that the mission had reached its end point.

What is the implication for oil and the global economy?

Deadlocked talks, draining global reserves, and the prospect of a return to bombing has seen the Brent price lift to hold at near $110 dollars over the past week. That is well above the $100 level that this newspaper has argued is close enough to the inflation-adjusted 15-year average to preclude a global economic reversal. And indeed, to date, the global growth outlook and markets and currencies have held up strongly. Should the Americans engage in a second round of bombing, oil may hold or exceed its current highs for a further period of weeks, exerting a higher level of squeeze on the global economy, before coming off sharply in the aftermath of an exit.