On Monday, oil briefly hit about $120 a barrel before retreating after President Trump told CBS the “war is very complete, pretty much,” claiming Iran has “no navy, no communications, no air force.” Earlier, Defense Secretary Pete Hegseth had said the war was just beginning; Trump brushed off the contradiction, saying both could be true and calling it “the beginning of building a new country.”
In the ten days since US and Israeli strikes on Iran began, Washington’s messaging has swung from “open to negotiations” to demanding “unconditional surrender,” to predicting a quick end, to threats of hitting harder and now to nation-building. The official signal has often read as noise, making intentions hard to read.
The pressing question is whether the parties can find a durable exit that ends hostilities and restores some stability, particularly to global energy markets that have been jolted by the violence. Current signs are discouraging.
On the US side, Trump’s stated positions are unreliable indicators of policy: he reacts to market moves—oil spikes and stock selloffs—more than to strategic logic. The roughly 5% drop in crude after his CBS interview suggests markets trade on his moods as much as on any credible de-escalation plan.
The strikes have reportedly killed Iran’s Supreme Leader Ali Khamenei and dozens of senior officials and commanders, and, as Trump acknowledged, destroyed many of the people the US would need to negotiate with. “Most of the people we had in mind are dead,” he said. “Pretty soon we are not going to know anybody.”
Domestic constraints have so far been limited. Seven US service members have been killed—the first American combat deaths in the Middle East since the Afghanistan withdrawal—and 18 others seriously wounded. Congress tried and failed to reassert war powers in the Senate for the eighth time since June 2025. Parts of Trump’s base have expressed frustration, but not enough to force a decisive course change.
Economics may be the more plausible pressure point. With oil above $100 a barrel and midterm elections approaching, a sustained energy shock threatens Trump’s political brand built on reversing inflation. Goldman Sachs has warned inflation could push back toward 3% if the conflict endures.
Iran’s situation is more complex. Two weeks earlier, negotiations with the US looked promising. Oman’s foreign minister said a breakthrough had been reached: Iran would refrain from stockpiling enriched uranium, accept full IAEA verification, and downgrade enriched material to the lowest level. A fourth round of talks was planned, but strikes began the next day—repeating a pattern from the Twelve-Day War in June 2025, when attacks followed negotiations.
Foreign Minister Abbas Araghchi framed the lesson bluntly: “Negotiate with the US when we negotiated with them twice, and every time they attacked us in the middle of negotiations?” The appointment of Mojtaba Khamenei as successor signals hardliners consolidating power. A return to the late-February negotiating status quo looks unlikely.
That leaves a paradox: both sides may have incentives to de-escalate, but neither can easily do so. Trump cannot credibly commit to terms as his positions shift; Iran, having ruled out ceasefire or surrender while attacks continue, finds talks politically toxic for any new leadership. The diplomatic infrastructure—Omani channels, negotiating counterparts and verification frameworks—has been badly damaged.
The regional economic fallout is immediate. The Strait of Hormuz, effectively closed, carries about 60% of Asia’s crude imports. Thailand’s stock exchange halted trading after an 8% plunge. QatarEnergy has suspended exports for the first time in 30 years, affecting Singapore and Thailand’s LNG supplies. China ordered major refineries to halt diesel and petrol exports, spreading energy strain to smaller neighbors. Myanmar and Pakistan have introduced fuel rationing.
If the conflict expands—through a prolonged Hormuz closure, wider Iranian attacks on Gulf energy infrastructure, or a US-Israeli ground operation—the regional damage could exceed disruptions from the Russia-Ukraine war. Even if violence recedes, recovery will be slow: insurance premiums, shipping reroutes and broken contracts do not reset overnight.
Beyond immediate costs, the precedent of striking a negotiating partner mid-talk—twice—will shape how regional states view the credibility of US-led diplomacy for years to come.
Lam Duc Vu is a Vietnam-based risk analyst focused on regional trade and geopolitics
