- Oil prices fell 7% on hopes of US-Iran peace but rose 1% after US strikes reports
- China and Oman are mediating talks to restart US-Iran negotiations on nuclear issues
- Trump expressed optimism on diplomacy and denied planning attacks after midterms
Oil markets are facing conflicting signals as hopes of a peace deal between the US and Iran compete with reports of possible military action and threats of retaliation. Crude oil prices fell 7% in the previous session on hopes of progress in talks, but rose 1% in early Asian trading following reports of fresh US strikes on Iranian sites.
Market expert Ajay Bagga, in his post on X, wrote that the situation remains uncertain, with diplomatic efforts pointing towards peace even as military preparations and threats of further attacks continue. He advised investors to remain cautious this week, as the risk of further escalation remains high.
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Peace Efforts Offer Hope Of Lower Oil Prices
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Several countries are trying to bring the US and Iran back to the negotiating table. China has appointed a Middle East envoy, while senior Omani and Iranian leaders have held discussions in China on finding a way to end the conflict.
US President Donald Trump and Vice President JD Vance have also spoken positively about the possibility of negotiations to dismantle Iran's nuclear programme. Trump said oil prices were falling because people believed there would be no fresh war with Iran.
Asked whether he was considering an attack on Iran after the US midterm elections, Trump said no.
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Fresh Reports Raise Fears Of Another Attack
However, the possibility of renewed military action remains. According to a Wall Street Journal report on Tuesday, the US had struck some Iranian sites, including Qeshm Island. There was no official confirmation from the US at the time of the report, though.
Bagga also pointed to reports of Qatari mediators being sent back after four hours of discussions with Iran's Revolutionary Guard. Hardliners in Iran are insisting that the US meet seven conditions before meaningful peace talks can move forward.
Iranian officials, including Supreme Leader Mojtaba Khamenei, have warned that the country would retaliate if the US restarts the conflict. Trump has reportedly been briefed on possible military options, including further airstrikes, tighter economic sanctions, and restrictions on Iranian trade. US military preparations in the region have also continued.
Bagga said the conflicting signals make it difficult for markets to assess what could happen next. With peace talks still uncertain and the possibility of fresh attacks remaining, he advised investors to stay conservative and wait for more clarity before taking major decisions this week.
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