Trump's Iran talks to begin Monday as oil slides 6%

President Donald Trump said new talks with Iran will begin Monday afternoon after he called off what he described as the biggest attack since World War II, sending Brent crude down more than 6 percent to $82.41 a barrel in early Asian trading and unwinding part of the risk premium built into energy markets since the war began Feb. 28.

"We're talking to them in the form of a negotiation. It begins tomorrow afternoon," Trump told reporters aboard Air Force One, adding that Gulf allies Qatar, Saudi Arabia and the United Arab Emirates had urged him to hold off on strikes. Iran's foreign ministry spokesman, Esmail Baghaei, said Tehran is not currently negotiating with the United States, only with Oman over a temporary safe route through the Strait of Hormuz.

The strait normally carries about a fifth of the world's traded oil and natural gas, and its effective closure since the conflict started has pushed Brent above $100 a barrel for much of March through May, peaking at $126. US-traded crude fell 4.6 percent to $80.74 in Monday's session. The war, now in its sixth month, has left more than 50,000 American troops deployed in the Middle East, with 18 US service members killed, while Congress has been asked to approve $67 billion in supplemental funding.

The stakes extend beyond oil. The conflict has upended global energy markets and sent fuel and food prices soaring, with UN Secretary-General Antonio Guterres warning the war is "increasingly becoming a driver of global instability." If Monday's talks produce a reopening of Hormuz and an end to Iran's nuclear threat, as Trump has demanded, energy prices could fall further; if they fail, the risk premium returns.

Trump said the planned strikes would have been "the biggest attack since World War II," and that he decided to give diplomacy more time after hearing from key Gulf leaders as well as unnamed Iranian officials. He declined to name a venue, participants or deadline for the talks, saying only that "the deal is imminent, having to do with the Hormuz Strait and also, ultimately, the denuclearization of Iran."

Iran's semi-official Mehr news agency denied that Tehran had asked Washington to hold off on military action, calling Trump's claims "nothing but a new lie." Baghaei said a deal with Oman would not be enough to reopen the strait for commercial shipping while the United States continued what Tehran calls its "aggression."

For markets, the question is whether this pause differs from earlier false starts. Trump has a pattern of threatening massive strikes only to call them off — on April 7 he warned that "a whole civilization will die tonight" if Iran refused talks, and a framework deal agreed in mid-June collapsed within weeks as both sides resumed attacks. Oil majors have been the clearest beneficiaries of the disruption — Exxon Mobil doubled second-quarter profit to $14.53 billion, while Chevron nearly quadrupled earnings to $12.07 billion as Brent averaged above $100.

The diplomatic opening comes as the human toll of the conflict mounts. In Gaza, local hospitals said at least 17 people were killed in Israeli strikes over the weekend, including children, while Iran's judiciary said it executed two men convicted of spying for Israel. Soaring summer temperatures have turned the plastic-sheet tents sheltering hundreds of thousands of displaced Palestinians into suffocating ovens, compounding a humanitarian crisis that aid agencies warn is heightening the risk of dehydration and disease.

This article is for informational purposes only and does not constitute investment advice.