RaboResearch highlights that US rare earths inventories may cover only about two months after depletion from the Iran conflict, potentially giving China significant leverage. The report suggests rare earth supplies could shape the duration of US strikes on Iran and constrain US policy options, raising the risk of further escalation or unconventional strategic responses.

Short US inventories and Chinese bargaining power

"It claims that after depletion in this war, the US has only around two months of rare earths inventory, and “supplies would dominate talks when Trump sat down with Chinese President Xi Jinping.” This is obviously of critical importance."

"If so, the US response *might* again be threatened escalation to deescalate: in short, to make clear to China, one way or another, that the recent chaos in energy markets can get worse again if there were to be any problems with its rare earths supply."

"Moreover, there are already suggestions Beijing, despite geopolitical alignment with Tehran, sees stability and the flow of oil as the more important metric. That might end up in a good place, both on energy and on US-China relations, but it could also make for some wild headlines and price action on the way there. It’s certainly a tail risk worth considering."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)