Trump Calls Off Iran Strike After Gulf Allies Plead for Talks, Oil Drops
By Aboki Forex —
Oil prices fell on Tuesday after President Donald Trump said he cancelled a planned military strike on Iran, following a request from Persian Gulf allies. Brent crude dropped towards $110 a barrel, reversing Monday’s 2.6 percent gain. West Texas Intermediate for July traded below $104.
Trump announced on social media that the leaders of Saudi Arabia, Qatar, and the United Arab Emirates asked him to hold off on the attack, which was set for Tuesday. He said serious negotiations with Iran are now taking place. The news eased fears of an immediate conflict that could choke off oil supplies through the Strait of Hormuz.
Crude prices had rallied in recent weeks over uncertainty around the talks and the risk that the near-total closure of the strait would cut off Persian Gulf energy exports for longer. Trump has repeatedly threatened military action against Iran without following through. Tehran has not confirmed that renewed discussions are underway.
“The president’s calling off tomorrow’s scheduled attack is a positive,” said Mark Malek, chief investment officer at Muriel Siebert & Co. “The change of plans just shows how stochastic the situation is with negotiations.”
Trump said the United States is prepared to attack if an acceptable deal is not reached, but he did not set a deadline. Speaking at a White House event on Monday evening, he said: “I put it off for a little while, hopefully maybe forever, but possibly for a little while, because we’ve had very big discussions with Iran, and we’ll see what they amount to.”
A US naval blockade has left Iran’s Kharg Island oil terminal idle for at least 10 days, cutting off Tehran’s petroleum revenues and withdrawing millions of barrels from the market. This is a sharp reversal for Iran, which had been the dominant crude exporter through the Strait of Hormuz after barring other nations’ vessels from the waterway in the opening weeks of the war.
Crude briefly pared gains on Monday after Iran’s semi-official Tasnim news agency reported that Washington had proposed a temporary waiver on oil sanctions until a final deal is reached. A US official who refused to be named due to the sensitivity of the matter said the story was false but did not elaborate.
Meanwhile, the United States issued a new waiver allowing the sale of Russian crude oil and petroleum products already loaded on tankers, days after the previous one expired.