Oil briefly surged toward $120 a barrel on Monday before retreating after President Trump told CBS the “war is very complete, pretty much,” asserting Iran now has “no navy, no communications, no air force.” Earlier, Defense Secretary Pete Hegseth had said the war was just beginning; Trump waved off the inconsistency, suggesting both statements could be true and describing the effort as “the beginning of building a new country.”
In the ten days since US and Israeli strikes on Iran began, Washington’s public messaging has swung wildly — from openness to talks, to demands for “unconditional surrender,” to predictions of a swift end, then to threats of heavier strikes and now talk of nation-building. The official signals have often sounded like noise, leaving intentions unclear.
The central question is whether the parties can craft a durable exit that ends hostilities and restores some stability — especially to global energy markets rattled by the violence. Current indicators are discouraging.
On the US side, Trump’s stated positions are a poor guide to policy: he responds more to market reactions — oil spikes and stock selloffs — than to a fixed strategic plan. The roughly 5% drop in crude after his CBS remarks suggests traders are reacting to his moods as much as to any credible de-escalation steps.
The strikes have reportedly killed Iran’s Supreme Leader Ali Khamenei and dozens of senior officials and commanders. As Trump acknowledged, many of the people the US would need to negotiate with have been eliminated. “Most of the people we had in mind are dead,” he said. “Pretty soon we are not going to know anybody.”
So far domestic political constraints in the United States have 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 again failed to reassert war powers in the Senate, the eighth such attempt since June 2025. Parts of Trump’s base have expressed frustration, but not enough to force a decisive policy shift.
Economic pressure may be the more plausible lever. With oil trading above $100 a barrel and midterm elections looming, a sustained energy shock threatens Trump’s political brand built on reducing inflation. Goldman Sachs has warned that prolonged conflict could push inflation back toward 3 percent.
Iran’s position is more complicated. Just two weeks earlier, diplomacy appeared to be making progress. Oman’s foreign minister reported a breakthrough: Iran would forego stockpiling enriched uranium, accept full IAEA verification and downgrade enriched material to the lowest level. A fourth round of talks was planned — until strikes began the next day, echoing a pattern from the Twelve-Day War in June 2025 when attacks followed negotiations.
Foreign Minister Abbas Araghchi put the lesson bluntly: “Negotiate with the US when we negotiated with them twice, and every time they attacked us in the middle of negotiations?” Domestically, hardliners are consolidating power — the appointment of Mojtaba Khamenei as successor is a signal that returning to the late-February negotiating status quo is unlikely.
That creates a paradox: both sides may have reasons to de-escalate, yet neither can easily offer credible concessions. Trump’s shifting positions make it hard for him to bind the US to terms; Iran, having publicly rejected ceasefires or surrender while under attack, finds negotiations politically toxic for any emerging 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 percent of Asia’s crude imports. Thailand’s stock exchange halted trading after an 8 percent plunge. QatarEnergy suspended exports for the first time in 30 years, disrupting LNG supplies to Singapore and Thailand. China ordered major refineries to stop diesel and petrol exports, spreading energy strain across smaller neighbors. Myanmar and Pakistan have introduced fuel rationing.
If the conflict widens — through a prolonged Hormuz closure, broader Iranian attacks on Gulf energy infrastructure, or a US-Israeli ground operation — the regional economic damage could surpass 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 these immediate costs, striking a negotiating partner mid-talk — now twice — will shape how regional states assess 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.
