World’s second largest oil consumer, China has urged Israel and Iran to reduce escalating tensions, emphasizing the need to avoid a “vicious circle” of conflict. This appeal was made during separate phone calls on Monday between China’s top diplomat Wang Yi and his counterparts from both nations.

What Happened: China is actively mediating in the Middle East. Wang Yi also engaged in discussions with Saudi Arabian Foreign Vice-Minister Waleed bin Abdulkarim El-Khereiji. During a call with Israeli Foreign Minister Israel Katz, Wang expressed China’s deep concern over the escalating tensions with Iran, stressing that renewed conflict is not beneficial for any nation, South China Morning Post reported on Tuesday.

Wang Yi urged for an “immediate, complete and permanent” ceasefire in Gaza, highlighting the importance of releasing hostages and returning to the “two-state solution” for lasting peace. Katz, in a post on X, stated that he informed Wang of Iran’s role in destabilizing the region and expressed expectations for China to maintain a balanced stance.

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In a separate call, Iranian Foreign Minister Seyyed Abbas Araghchi conveyed Tehran’s concerns about the risk of further conflict escalation. He urged caution from Israel and welcomed China’s mediation efforts to restore regional peace and security.

Why It Matters: The call for de-escalation by China comes amid a backdrop of fluctuating oil prices and geopolitical tensions in the Middle East. Recently, oil prices fell over 1% due to concerns over weaker demand from China. This occurred after China withheld aggressive fiscal stimulus that analysts had anticipated.

Additionally, oil prices dropped 2% after OPEC reduced its global oil demand growth estimate for the third consecutive month. This decline in oil prices reflects broader concerns about the Middle East’s geopolitical stability, particularly as Israel has not yet retaliated against Iran following a recent attack involving over 180 ballistic missiles.

Price Action: At the time of writing on Tuesday during the pre-market, United States Oil Fund ( USO ), LP was down by 4.81%, Invesco DB Oil Fund was trading 5.11% lower and ProShares Ultra Bloomberg Crude Oil was down by 8.13%, according to Benzinga Pro.

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This story was generated using Benzinga Neuro and edited by Pooja Rajkumari