Brent crude fell around 8.2% on Monday after Donald Trump said the United States and Iran were talking and a deal was possible, while warning that U.S. strikes would resume if negotiations failed. Saudi Arabia, Jordan and Iraq all reported drone attacks the same day, and Tehran denied it had asked for talks. Iran also said it still controls the Strait of Hormuz.
President Donald Trump said on Monday that Washington was having good talks with Iran and that there was a chance of a deal over their conflict, but he warned U.S. strikes would resume if the negotiations failed to deliver. Washington had abruptly suspended a two-week campaign of air strikes against Iran on Saturday, the latest strategic U-turn in the five-month-old conflict.
Trump told reporters aboard Air Force One that the two sides were talking right now and that if nothing came of it, the United States would go back to what it was doing two days earlier.
Drones hit Iran's neighbours
Tehran appeared to test the pause quickly. Saudi Arabia said it shot down drones aimed at petroleum targets, including in the capital Riyadh, and said the drones had been launched from Iraq by Iran-backed armed groups. It reserved the right to respond.
Separately, Iran's Houthi allies in Yemen said they had targeted the 1,200-km (745-mile) East-West Pipeline carrying oil to Saudi Arabia's main Red Sea port of Yanbu, in retaliation for what they said were Saudi drone incursions into Yemeni airspace.
Brent drops to just below $89
The halt to the bombing and Trump's remarks on talks sent oil prices tumbling. Brent crude, which had briefly ticked above $100 a barrel last week for the first time since May, fell around 8.2% on Monday to just below $89, having fallen as low as $87.55.
Trump's decision to suspend the campaign reflected advice from his military that the bombing had reached the limits of what it could achieve, according to a U.S. official and several U.S. media reports. That official told Reuters that commanders had advised the president they were running out of targets, and that the chairman of the Joint Chiefs of Staff, General Dan Caine, had expressed concern over the depletion of air munitions.
Iran denies asking for talks
Trump, Secretary of State Marco Rubio and other U.S. officials have described Iran as begging for a deal. But Iran's Foreign Ministry spokesman Esmail Baghaei said in a televised press conference on Monday that Tehran had not asked to resume peace talks with the United States, adding that messages were still being passed through mediators. He called reports of Iran requesting negotiations with the U.S. fabricated, and, according to Reuters, said: "This is not in our DNA."
Iran said it was still in control of the contested Strait of Hormuz, and several Iranian state media outlets cited an informed source as saying Iran had turned around six offending ships on Monday morning that had attempted to cross without its permission.
Washington and Tehran reached an agreement in June on a framework for talks meant to take place by the end of August, but the sides dispute what the memorandum's language says about the strait — Washington insists it requires Tehran to allow free travel, while Iran says it grants it the authority to supervise transit.
Source: Investing.com
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