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What you need to know

U.S. pressure campaign on Iran tightens the screws

The U.S. Department of State, via its Virtual Embassy in Iran, is urging U.S. citizens to leave Iran immediately. Germany and China have issued similar calls.

Iran’s Press TV reports that Khorramshahr-4, which it describes as one of the country’s most advanced long-range ballistic missiles, has been deployed at an underground “missile city”. The stated purpose is to shield the system in the event of strikes, rather than to prepare it for immediate use.

Iran’s foreign minister, Abbas Araghchi, and his deputy delayed the start of negotiations in Oman on today, beginning them almost two hours late.

This follows a rather strange insult directed at the US in relation to Araghchi’s flight to Oman. Iranian aviation authorities listed the place of departure as “Tabas”, rather than Tehran. Tabas is closely associated with Operation Eagle Claw, the failed U.S. attempt in April 1980 to rescue hostages held in Tehran. The operation collapsed at a remote desert staging site near Tabas (often referred to as “Desert One”), and in Iran the episode is widely commemorated as a U.S. humiliation, with wreckage displayed and official ceremonies held there. It is also the location of an earthquake that occurred in 1978 and which helped to turn public opinion against the Pahlavi monarchy. The symbolism suggests something about the Iranian negotiators’ mindset.

Meanwhile, the United States is intensifying pressure on the commercial network that enables Iran to sell oil into China. The aim is to make enforcement more effective, constrain Tehran’s oil income, and force Chinese firms to weigh the risks of doing business with sanctioned counterparties. The escalation followed a phone call between President Donald Trump and Xi Jinping on 4 February.

At the center of Washington’s approach is a compliance demand: reduce the flow of Iranian crude and condensate to Chinese buyers, and disrupt the services that make such transactions possible, including shipping, terminals, trading intermediaries, and finance. If enforced, this will have a critical impact on Iran’s economy, which is now highly dependent on oil sales to China.

The campaign is being carried out across agencies. The U.S. Department of the Treasury has highlighted designations targeting Chinese importers and logistics nodes linked to Iranian exports, while the U.S. Department of State has announced sanctions packages intended to deny Iran funds from energy exports.

What remains unclear is whether the Trump-Xi call produced any private understanding on sanctions enforcement, or on China’s willingness to reduce its intake of Iranian barrels, or on potential near-future military action against Iran.

The ultimate complex system

Cryptocurrencies suffer a $350bn rout as leveraged bets unwind

Roughly $350bn was wiped from the global cryptocurrency market’s total value on Friday, as a broader retreat from risky assets continued to spill into digital tokens and forced heavily leveraged traders to reduce positions.

Bitcoin briefly slid to around $60,000, its weakest level in roughly 16 months, before rebounding into the mid-$60,000s. Ether also recovered after touching a multi-month low. Traders pointed to liquidation cascades in derivatives markets, in which falling prices trigger automatic position closures that amplify the decline.

The sell-off was compounded by weaker marginal demand. Outflows from U.S. spot bitcoin exchange-traded funds have accelerated, removing a prop that investors had come to treat as durable. The retreat adds to a larger drawdown since the market’s peak in October 2025, when expectations of a more permissive regulatory climate helped propel bitcoin to record highs.

For the broader economy, the headline loss matters less than where the losses sit and how much leverage was involved. Crypto remains small relative to global equities and credit markets, so the usual transmission runs through confidence and financial conditions rather than through bank balance sheets. A sharp fall can reinforce risk-off behavior across markets, tightening funding conditions at the margin as investors cut exposure to volatile assets.

The more consequential channels are mechanical. When leverage is high, liquidations can prompt margin calls that force some investors to sell liquid assets elsewhere, briefly spreading volatility beyond crypto. A second watchpoint is the sector’s plumbing, particularly stablecoins. A sustained loss of confidence in a major stablecoin, or any disruption to redemptions, would be more likely to create spillovers because stablecoin reserves are often parked in short-dated government securities and cash-like instruments.

Outside finance, the real-economy effects so far are narrower but visible. Losses concentrated among a small group of wealthy holders usually produce only a modest hit to consumption, but widespread retail exposure can weigh on discretionary spending in markets where crypto ownership is high. A downturn also chills venture funding, hiring, and marketing across the crypto ecosystem, and it squeezes miners’ cash flow, with knock-on effects for electricity demand and related service industries in some regions.

Most crypto sell-offs register as a sentiment shock. They become a wider economic issue when leverage forces cross-asset selling, or when a key intermediary or stablecoin comes under pressure. This has not yet occurred, but is becoming increasingly likely.

America first

U.S. pressure on Cuba’s fuel supply

Relations between the U.S. and Cuba have deteriorated rapidly in recent days, as the White House has rolled out a new pressure campaign aimed at Havana’s fuel supply. 

President Donald Trump has paired tough rhetoric with hints of a diplomatic opening, while the U.S. Department of State and other agencies have portrayed the crisis as a consequence of Cuba’s own economic management.

The main policy change is an executive mechanism intended to deter third countries from providing oil or petroleum products to Cuba by threatening additional U.S. tariffs on their exports. It is to be implemented through inter-agency determinations involving the U.S. Department of Commerce, alongside the U.S. Department of Homeland Security and the Office of the United States Trade Representative, with the sanctions-and-licensing framework still anchored in the long-standing embargo regime administered by the Office of Foreign Assets Control. At the same time, Washington is trying to show it can apply pressure without appearing indifferent to civilian suffering. Officials have announced an additional $6 million in humanitarian assistance, to be channeled through church-linked partners including Caritas and monitored by the U.S.

Inside Cuba, the immediate problem is energy scarcity. Fuel shortages and prolonged blackouts are disrupting transport, refrigeration, water supply, and basic commerce, compounding an already brittle economy and aggravating public frustration.

The U.S. Embassy in Havana has warned Americans to prepare for significant disruption, a reminder of how volatile daily conditions have become. The government of President Miguel Díaz-Canel is moving toward rationing and emergency conservation, while promising longer-term fixes such as expanded solar generation. It has also cast the U.S. measures as an “energy blockade” designed to bring the country to a halt. The near-term outlook points to a mix of sustained external pressure and selective humanitarian relief, with a narrow, exploratory diplomatic channel possible but far from assured.

It’s the U.S. vs China, everyone needs to pick a side

Trump turns down Putin’s stopgap nuclear offer as New START expires

President Donald Trump has rejected an offer from Russian President Vladimir Putin to keep the main numerical limits on U.S. and Russian strategic nuclear deployments in place on a voluntary basis after New START lapsed on 5 February.

Signed in 2010 and extended in 2021, the treaty capped each side at 1,550 deployed strategic warheads and 700 deployed delivery systems (intercontinental ballistic missiles, submarine-launched ballistic missiles, and heavy bombers). It also provided transparency through data exchanges and on-site inspections. With its expiry, Washington and Moscow no longer have a legally binding framework constraining these forces, the first such gap in decades.

Last year Putin raised the idea of a one-year “self-imposed” extension of the central limits, casting it as a bridge to negotiations on a successor arrangement. Since then the Kremlin has said it regrets the treaty’s end, while maintaining that Russia will act “responsibly” on strategic stability even without New START in force.

Trump has indicated he wants a replacement accord rather than a temporary rollover, and has argued that any new framework should go beyond the bilateral bargain that has now ended, to include China. That approach runs into a familiar obstacle: China, the reason to widen talks, has reiterated that its arsenal is far smaller than those of the U.S. and Russia, and that it has little interest in joining their negotiations.

Without a rapid diplomatic reset, the next phase of nuclear competition may be shaped less by formal ceilings than by mutual suspicion, weaker transparency, and a greater emphasis on messaging and hedging. It is a poor substitute for rules.

Starmer’s Chagos deal gets Trump’s shrug, not his shelter

President Donald Trump has offered Prime Minister Keir Starmer a guarded political lifeline over the Chagos Archipelago, calling the agreement to transfer sovereignty to Mauritius “the best deal he could make” in the circumstances. Trump also insisted that the U.S. retains the right to secure the joint base on Diego Garcia by force if the lease ever unravels.

The endorsement was cooler than it sounded. It amounted less to a blessing than to a reminder that Washington’s strategic red lines remain unchanged, whatever legal situation London gets itself into. Trump’s tone was also a moderation on previous statements. On 20 January, he had derided the plan as “great stupidity” and “total weakness”, rhetoric that encouraged Conservative opponents and strengthened the impression that Starmer had misread the White House.

For Starmer, the timing is awkward. He is already under intense domestic pressure over his appointment of Lord Mandelson as ambassador to Washington, amid renewed scrutiny of Mandelson’s links to Jeffrey Epstein. Starmer has apologized to Epstein’s victims and said that, while Mandelson’s acquaintance with Epstein was known, he was misled about the “depth and the darkness” of the relationship.

Against that backdrop, the government’s legislative push on Chagos looks increasingly tentative. Ministers have delayed proceedings in the House of Lords, and the bill has failed to regain momentum despite Trump’s grudging acceptance. The upshot is that Starmer now faces the worst of both worlds: a deal still mired in parliamentary and legal warfare at home, and an American partner implying that, if the arrangement ever frays, Washington will act first and tidy up the paperwork later.

Australia and Indonesia tighten their security ties

In Jakarta, Prime Minister Anthony Albanese and President Prabowo Subianto signed a new bilateral security treaty meant to deepen defense and strategic cooperation between the two neighbors.

Public descriptions from both governments stress political commitment and structured consultation if either country faces a security threat, rather than an automatic mutual-defense guarantee.

The symbolism matters because security ties have often trailed the two countries’ deep economic and people-to-people links.

A 1995 security agreement (which today’s treaty is basically identical to) was later scrapped amid the rupture over Timor-Leste in 1999; later arrangements, including the 2006 Lombok framework, steadied the relationship without fully dispelling strategic mistrust. The treaty also builds on a more practical defense-cooperation agreement concluded in 2024. Together, they suggest the two governments are trying to anchor continuity under Prabowo and Albanese, in a region where maritime security, gray-zone pressure, and U.S.-China competition increasingly shape planning in both capitals.

Australian officials have described the agreement as the most consequential upgrade in the partnership in decades. However, the text obliges little. It emphasizes consultation and cooperation rather than creating new, binding warfighting obligations.

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