Strike Cancelled, Iran Negotiations Revived
US President Donald Trump canceled plans for a new military strike against Iran, just hours after previously threatening to strike Tehran “very hard” and take over the country’s key oil infrastructure. This change of heart immediately shifted market sentiment, with oil prices dropping below US$90 per barrel and stocks rebounding.
Trump said the strike was canceled because talks to end the war had been brought to the highest levels of Iran’s leadership. He also said the deal document could be finalized within days, even mentioning the possibility of signing it in Europe over the weekend with Vice President JD Vance in attendance. However, it remains unclear whether Iran will participate, as semi-official Iranian media reported the deal text had not yet been approved by Tehran’s leaders.
Trump’s statement marked a sharp reversal from his previous threats. That same day, he had declared the US would strike Iran again and threatened to seize Kharg Island, a key hub for Iranian oil exports. However, he later reversed course, saying the American public might not necessarily be willing to accept such a large-scale military operation.
While diplomatic opportunities have resurfaced, the risks on the ground have not disappeared. A two-month ceasefire collapsed after a wave of retaliatory strikes between the US and Iran. Talks are said to be ongoing, with Qatar taking a larger role as mediator, but both sides are still using military pressure as a bargaining chip in the negotiations.
Key obstacles remain. Iran is demanding the release of more than US$10 billion in funds frozen abroad, while the US is demanding Tehran hand over or destroy its stockpile of highly enriched uranium. Iran also wants a ceasefire in Lebanon, where Israel continues to face off against Hezbollah, Tehran's main ally.
For the market, the primary focus remains the Strait of Hormuz. Trump has said the US naval blockade of Iran will remain in place until a deal is finalized, while Iran previously declared Hormuz closed to all shipping. If this waterway remains disrupted, the risk of an oil spike remains significant. However, news that the US strikes have been postponed and negotiations are continuing has given the market room to unwind some of its risk premium, pressuring oil, supporting stocks, and limiting the safe-haven dollar's gains. (Arl)
Source: Newsmaker.id
