Oil back above $100 as conflicting reports emerge on US-Iran talks
Stock markets had originally rebounded on Monday said Trump said he would hold off strikes on Iran.
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US-Iran War Puts Strait Of Hormuz Under Fire, Disrupting Global Energy Trade
US strikes on Iran escalate Strait of Hormuz tensions, spiking energy prices, disrupting trade and heightening global geopolitical risk.
Trade traffic within the Strait of Hormuz has nearly halted as fuel tankers and other shipping remain vulnerable to attacks and are virtually uninsurable, amplifying fears that the US-Israeli war on Iran is turning into a broader global conflict with major economic consequences.
Global energy prices, especially, are a key focus point since the Strait serves as a critical maritime artery for roughly 20% of the world’s oil flows — 70% of that oil goes to China, South Korea, India, and Japan.
Meanwhile, President Donald Trump’s standoff with EU leaders over the use of certain military bases is making an already contentious situation worse.
Chokepoint Under Fire
Iran’s Revolutionary Guards claim total control of the passage just days after US-led airstrikes killed Iran’s Supreme Leader, Ayatollah Ali Khamenei. The UK Maritime Trade Operations Center is actively documenting multiple vessel attacks and electronic interference affecting navigation in and around the Gulf.
A bomb-carrying drone boat struck a Marshall Islands-flagged tanker in the Gulf of Oman, killing at least one mariner, according to the Wall Street Journal, citing Omani authorities.
The economic shock was swift. West Texas Intermediate crude notched its biggest two-day rally since March 2022. European natural gas prices nearly doubled in 48 hours. The biggest jolt came after QatarEnergy halted liquefied natural gas production following attacks on its facilities, sending European gas prices soaring more than 40%. The United States Oil Fund LP rallied over 15% over the past five days.
Analysts are also at odds over whether a total Iranian blockade will occur.
Insurance Vanishes, Ships Stall
“A sustained, structural military blockade by Iran that totally stops ships from passing through is unlikely,” Morningstar Equity Director Joshua Aguilar said. Still, the commercial reality may produce the same effect.
“Ships may not pass through because no insurance is willing to cover them,” Aguilar added
Mutual insurers such as the London P&I Club, NorthStandard, UK P&I Club and Noord Nederlandsche P&I Club provide coverage for vessels navigating volatile regions. If that coverage drops, shipping companies face untenable exposure — effectively freezing commerce even absent a formal blockade.
In response, Trump said on his Truth Social platform that he had ordered the US International Development Finance Corporation to offer political risk insurance and guarantees “for the financial security of all maritime trade, especially energy, traveling through the Gulf.” He also said the US Navy would escort tankers through the Strait.
BIMCO’s Chief Safety & Security Officer, Jakob Larsen, scrutinized the logic of Trump’s plan. Indeed, naval escorts would reduce the threat ships currently face.
“That said, providing protection for all tankers operating in areas currently threatened by Iran is unrealistic,” he says. “This would require a very high number of warships and other military assets.”
CaixaBank, in a research note on Wednesday, issued its own warnings about Iran’s attacks and Strait of Hormuz closures. Energy prices will spike as long as the disruption continues, the firm predicts.
“Iran’s response — expanding the radius of the conflict, effectively closing maritime traffic through Hormuz, and threatening critical infrastructure — is causing a short-term escalation of tensions,” the firm stated. “It remains to be seen for how many days this response can be sustained and what approach will be taken by the new leadership core (and, in particular, by Khamenei’s successor).”
Persistent high prices could prompt hawkish European Central Bank and Federal Reserve moves, increasing economic drag, the firm continued.
Transatlantic Talks Turn Tense
The maritime chaos is unfolding alongside a sharp diplomatic rupture with Europe. Trump on Tuesday threatened to “cut off all trade with Spain” after Madrid refused US access to its military bases. He also criticized the UK’s decision to block the use of Diego Garcia in the Indian Ocean.
“This is not the age of Churchill,” Trump said during a White House meeting with European counterparts. “The UK has been very, very uncooperative with that stupid island that they have.”
The remarks underscore mounting friction within NATO and the broader Western alliance at a moment when coordinated action would be critical to stabilizing markets. Instead, the spat adds another layer of uncertainty to global trade flows already strained by inflation and tariff confusion on the heels of the US Supreme Court ruling against Trump.
Many dealmaking plans are also likely on hold, marking a stark contrast to 2025, the second-highest year on record for transaction value.
“The sentiment was that the stars were aligned” for a similar trajectory in 2026, said Kyle Walters, an analyst at PitchBook.
M&A consultancies such as McKinsey & Company and Bain & Co. had projected sustained M&A growth in 2026 due to energy security priorities, sovereign wealth fund firepower, and supportive fiscal reforms.
Then one weekend changed the narrative. As Walters puts it: “Uncertainty is bad for M&A appetite.”
Tariff ambiguity can slow deals. Inflation complicates financing. Armed conflict in a region central to global energy flows is far more destabilizing.
“In periods of uncertainty, buyers take a step back. They’re in wait-and-see mode,” Walters said, adding that domestic M&A has been “flipped on its head.” Cross-border activity is particularly exposed, with capital flight, currency volatility, and political risk creating an “unopportunistic M&A environment.” European firms considering expansion into the Middle East now face heightened scrutiny; “It has to be an A+ transaction to proceed,” Walters said.
Markets Brace For Escalation
What began the year as a story of alignment and acceleration has become one of recalibration — with capital pausing just as geopolitical risk surges.
BMI, a unit of Fitch Solutions, outlined a short-term scenario in which the US coordinates with Israel to overwhelm Iran and minimize retaliation against US assets and the Strait itself.
But even a limited campaign carries economic consequences.
Abigail Hall, a senior fellow at the Independent Institute, warned that energy markets are likely to bear the brunt. “There are already concerns about shipping and other disruptions — particularly around the Strait of Hormuz,” she said, pointing to “knowledge constraints on the part of policymakers and the presence of misaligned incentives.”
Hall also expressed skepticism that the US-led strikes would produce long-term political transformation inside Iran. “You may have ‘cut the head off the snake,’ but neglected the fact that there were many other vipers in the room,” she said.
Military strikes, she explained, often empower the most extreme factions of a country and produce a “rally-around-the-flag” effects whereby an external attack draws the civilian population toward the existing regime.
“In Iran we’ve seen that military escalation, and the domestic dissent it inspires,” she adds. “It often leads to harsher repression and increased regime control.”
US-Iran talks conclude with claims of progress but few details | Nuclear Weapons News
Tehran, Iran – Another round of indirect talks between Iranian and United States officials ended with a mediator claiming “significant progress” but still no clear evidence that either side was willing to concede enough on their positions to avoid war.
After the conclusion of the talks in Geneva on Thursday, Iranian Foreign Minister Abbas Araghchi said further technical talks would be held next week in Vienna and progress had been “good”.
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“These were the most serious and longest talks,” Araghchi said.
Omani Foreign Minister Badr bin Hamad Al Busaidi, who mediated the talks, said Iranian and US diplomats would consult with their governments before the Vienna talks.
Few details have emerged about the discussions, but Araghchi was reported to have met US envoy Steve Witkoff – if only briefly, according to Iran’s Tasnim news agency.
The Iranian team, led by Araghchi, handed over on Wednesday night Tehran’s written proposals to Al Busaidi, who also mediated previous rounds of talks in Geneva and Muscat.
The Omani diplomat then met with the US delegation on Thursday, led by Witkoff and US President Donald Trump’s son-in-law Jared Kushner. Al Busaidi mediated between the two teams throughout the day, and the US delegation also held separate talks over Ukraine.
Also taking part in the talks was Rafael Grossi, the director general of the International Atomic Energy Agency (IAEA), which will have to undertake nuclear monitoring and verification duties in Iran in case of any agreement.
The UN watchdog will hold several days of board meetings starting on March 6, which is around the 10- to 15-day deadline floated by Trump last week for Iran to reach a deal.
Western media outlets have suggested the board could once again consider a move to censure Iran depending on the results of the Geneva talks. Iran has accused Grossi of taking politicised action and criticised the IAEA after Israel attacked Iran in June, one day after the agency passed a resolution saying Tehran was not complying with its commitment to nuclear safeguards.
Fundamental differences
The two sides have been at odds over key issues, including uranium enrichment and missiles.
Washington has repeatedly emphasised, in lockstep with Israel, that it will not accept any nuclear enrichment taking place on Iranian soil, even at civilian-use levels agreed during the 2015 nuclear deal that Iran agreed with world powers. Trump unilaterally abandoned that deal in 2018.
In the days leading up to the Geneva talks, US officials increasingly focused on Iran’s ballistic missile programme, saying the missiles threaten US military bases across the Middle East as well as Israel. Iran has refused to entertain any talks on its conventional weapons. Iranian officials, including President Masoud Pezeshkian, have repeatedly said they will never develop nuclear weapons.
Speaking to local officials during a provincial visit, Pezeshkian also shot back at Trump’s assertion during a lengthy State of the Union speech that Iran was “the world’s number one sponsor of terror”.
Pezeshkian said numerous Iranian officials and nuclear scientists have been assassinated over the decades, particularly in the immediate aftermath of the country’s 1979 Islamic revolution.
“If the realities are seen fairly, it will become clear that Iran is not only not a supporter of terrorism, but one of the main victims of terror in the region and across the world,” he said.
The Iranian government’s IRNA news agency said Tehran’s proposal was expected to gauge US “seriousness” in the talks because it contained “win-win” offers.
Iranian officials have not publicly discussed all the details of their proposals, but they are believed to include diluting part of the country’s 60-percent enriched uranium and keeping the uranium inside the country. Iranian authorities envisage that could be paired with economic opportunities for the US related to Iranian oil and gas and the purchase of airplanes.
Supreme Leader Ali Khamenei has maintained his tough rhetoric against the US as well, casting doubt on the chances of any agreement. He also said Trump would be unable to overthrow Iran’s government after the US president said regime change would be “the best thing that could happen” in Iran.
Araghchi said during an interview on Wednesday that even if Khamenei is killed, the theocratic establishment in Iran would carry on because it has legal procedures in place to appoint a successor. Pezeshkian added on Thursday: “They can eliminate me, eliminate anyone. If they hit us, a hundred more like us will come up to run the country.”
Double-digit inflation as Iran braces for war
Iranian and US officials have been hailing supposed “progress” in the indirect talks this month, but many Iranians continue to prepare for war.
In Tehran and across the country, people are buying bottled water, biscuits, canned foods and other essentials in case of a war.
“A few days ago, I bought a power bank to keep the electronics charged. Now I’m looking for a short-wave radio so we can hear the news if the state shuts down the internet and electricity infrastructure is bombed,” said a 28-year-old resident of the capital who asked not to be named.
As bombs fell during the 12-day war with Israel in June, Iranian authorities cut off almost all internet access for several days, followed in January by an unprecedented 20-day total blackout imposed on about 92 million people as thousands of people were killed during nationwide protests.
The Iranian government, which blames “terrorists” armed and funded by the US and Israel for the protests, has rejected Trump’s claim that 32,000 Iranians were killed during the demonstrations. It said more than 3,000 people were killed, and rejects documentation by the United Nations and international human rights organisations that its security forces were behind the killings.
As the threat of war intensifies, not all Iranians are capable of stocking up on food and other necessities due to rising inflation that has gripped the country for more than a decade as a result of a mix of chronic local mismanagement and US and UN sanctions.
According to separate reports by the Statistical Centre of Iran and the Central Bank of Iran released on Thursday, inflation has now shot beyond 60 percent.
The Statistical Centre put annual inflation in the Iranian month of Bahman, which ended on February 19, at 68.1 percent, while the Central Bank said it was 62.2 percent.
Food inflation was by far the strongest driver at a whopping 105 percent. That included a 207-percent inflation rate for cooking oil, 117 percent for red meat, 108 percent for eggs and dairy products, 113 percent for fruit and 142 percent for bread and corn.
Iran’s national currency, the rial, stood at about 1.66 million rials to the US dollar on Thursday, near an all-time low.
Oman confirms US-Iran talks will take place in Geneva on Thursday | Politics News
Oman’s Foreign Minister Badr Al Busaidi has confirmed that further talks between the United States and Iran will take place on Thursday amid spiralling tensions between the two countries.
“Pleased to confirm US-Iran negotiations are now set for Geneva this Thursday, with a positive push to go the extra mile towards finalizing the deal,” Albusaidi said in a social media post on Sunday.
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The announcement comes as the US continues to amass military assets in the Middle East, raising concerns about an all-out war against Iran.
Hours before Oman’s announcement, Iran’s Foreign Minister Abbas Araghchi said Tehran was ready to put in place a “full monitoring mechanism” to guarantee the peaceful nature of its nuclear programme and ease tensions.
Asked by Face the Nation moderator Margaret Brennan why Iran would want to pursue enrichment on its soil rather than buy enriched uranium from abroad, given the US military build-up and risk of an escalation, Araghchi said the issue was a matter of “dignity and pride” for Iranians.
“We have developed this technology by ourselves, by our scientists, and it is very dear to us because we have created it – we have paid a huge expense for that,” he said.
Araghchi cited among the costs two decades of US sanctions, the targeted killings of Iranian scientists, and US-Israeli attacks on nuclear facilities in June.
“We’re not going to give [our nuclear programme] up; there is no legal reason to do that while everything is peaceful and safeguarded” by the United Nations nuclear watchdog, the International Atomic Energy Agency (IAEA), Araghchi said.
As a “committed member” of the Non-Proliferation Treaty (NPT), which requires non-nuclear-weapon states not to seek or acquire nuclear weapons, Iran is “ready to cooperate with the agency in full”, Araghchi added.
But he stressed that under the treaty, Tehran also has “every right to enjoy a peaceful nuclear energy, including enrichment”.
“Enrichment is a sensitive part of our negotiations. The American team knows about our position, and we know their position. We have already exchanged our concerns, and I think a solution is achievable,” the minister noted.
Enrichment is the process of isolating and garnering a rare variant, or isotope, of uranium that can produce nuclear fission. At low levels, enriched uranium can power electric plants. If enriched to approximately 90 percent, it can be used for nuclear weapons.
US officials, including President Donald Trump, have previously suggested that Washington is seeking “zero enrichment” by Tehran.
Earlier this month, US Secretary of State Marco Rubio said any deal with Iran would need to include agreements on ballistic missiles and support for its allies in the region.
Araghchi, however, said on Sunday that Iran was “negotiating only nuclear” at the present time.
“There is no other subject,” he told CBS News, adding that he was optimistic that a deal could be reached.
The second round of nuclear talks concluded in Geneva on February 17. The US and Iran also held indirect talks in Oman earlier this month.
The Iranian delegation is working ahead of the meeting to present a draft that includes “elements which can accommodate both sides’ concerns and interests” to reach a “fast deal”, Araghchi said.
The top Iranian diplomat added the agreement would likely be “better” than the Joint Comprehensive Plan of Action (JCPOA), negotiated by former US President Barack Obama in 2015.
“There are elements that could be much better than the previous deal,” he said, without elaborating. “Right now, there is no need for too much detail. But we can agree on our nuclear programme to remain peaceful forever and at the same time, for more sanctions [to be] lifted.”
Some observers were less optimistic about the chances of striking a deal. Trita Parsi, executive vice president of the Quincy Institute, told Al Jazeera that Iran is likely to put forward a proposal that goes beyond anything they ever offered, but even that may not be enough.
“Trump has been sold a narrative by the Israelis that portrays Iran far, far weaker than it actually is. As a result, he’s adopting maximalist capitulation positions that are simply unrealistic based on how the power reality actually looks,” Parsi told Al Jazeera.
“Unless this gets corrected, even if the Iranians put forward a very far-leaning proposal that is extremely attractive to the US, Trump may still say no because he’s under the false belief that he can get something even better.”