Trump Cancels Threatened Strikes on Iran, Citing High-Level Talks; Markets Rally

Diplomatic Track

Iran's Foreign Ministry sharply condemned the "large-scale" US attacks of the previous night but stopped short of formally terminating the ceasefire that has been in place since April. Iran's military warned after the US strikes that it would attack every ship attempting to pass through the Strait of Hormuz, while the US regional command Centcom said on X that "Handelsschiffe fahren weiterhin heute Nacht in die Straße von Hormus ein und heraus" ("Commercial ships continue to enter and exit the Strait of Hormuz tonight").

Trump said the parties that had approved the talks and final points include the United States, Israel, Saudi Arabia, the United Arab Emirates, Qatar, Turkey, Pakistan, Bahrain, Kuwait, Jordan and Egypt. He suggested that a signing could take place over the weekend, probably in Europe, with time and place to be announced shortly. Trump also raised the prospect of the US gaining "vollständige Kontrolle" ("complete control") over Iran's oil and gas markets, including Kharg Island, Iran's most important oil export terminal.

Iranian Pushback

Iranian negotiators, however, publicly disputed that any framework agreement had been finalised. The Iranian news agency Fars, which is close to the powerful Revolutionary Guard, reported that no text had been agreed, citing a source connected to the negotiating team. Iranian political leaders denied progress had been made and, in a separate declaration, said new US attacks had rendered the ceasefire meaningless, although they did not formally abandon it.

Iranian negotiating circles expressed irritation shortly before Trump's latest reversal at what they described as a US strategy of coupling military threats with constantly shifting negotiating positions, which they said made talks more difficult. High-ranking Iranian politicians did not initially comment on Trump's most recent statements.

Fighting Across the Region

The military backdrop remained active. Over the weekend Iran and Israel fired at each other, and on the nights to Wednesday and Thursday Iran and the US exchanged heavy fire. The US military said it had struck Iranian military surveillance, communications and air-defence facilities. Iranian state media reported three people injured in the province of Tehran.

The violence also spilled into Gulf neighbours. In Bahrain, an eleven-year-old girl was injured in the attacks, according to local authorities, and in the capital Manama and the town of Hammad several vehicles caught fire and residential houses were damaged by falling debris from intercepted Iranian drones. Jordan said it had intercepted 20 Iranian missiles fired overnight, and Iran also attacked Kuwait. State radio reported that two ships were fired upon, and the Iranian news portal Mehr, citing official sources, said a boat carrying staple foods had been hit by a US projectile in the Strait of Hormuz, with its crew rescued.

Market Reaction

Financial markets reacted swiftly to the de-escalation. Wall Street indices extended their gains after the news, the euro strengthened against the US dollar, and Brent crude fell below 90 US dollars a barrel, its lowest level since mid-April. The price drop reflected in part the prospect that Iran's main oil export route through the Strait of Hormuz could remain open.

The disputes still on the table in the negotiations include Iran's nuclear program, shipping through the Strait of Hormuz, the war in Lebanon, sanctions against Iran and frozen Iranian assets abroad. Trump has repeatedly raised hopes in recent weeks that a deal was close, and the latest reversal leaves open the question of whether a framework can be locked in before another round of US-Iranian fire.

On a Truth Social post earlier in the day, Trump had additionally threatened to take over the island of Kharg, Iran's most important oil facility, and other oil infrastructure points in the not-too-distant future, underscoring the mix of coercive and conciliatory signals that has marked his Iran policy since the war began at the end of February.