US-Iran Peace Hopes Send Oil Below $100 Before Trump Cancels Talks

(P1) Oil prices briefly dipped below $100 a barrel Friday on renewed optimism for a US-Iran ceasefire, but reversed gains after President Donald Trump announced he had called off a high-stakes diplomatic mission to Pakistan aimed at ending the conflict.

(P2) "I can confirm Special Envoy Witkoff and Jared Kushner will be off to Pakistan again tomorrow morning to engage in talks... with representatives from the Iranian delegation,” White House Press Secretary Karoline Leavitt had told Fox News earlier on Friday, fueling initial market optimism.

(P3) The whiplash was evident across markets. Brent crude, the international benchmark, fell as low as $99.50 before rebounding to trade near $105 a barrel after Trump's reversal. US equities were mixed, with the tech-heavy Nasdaq Composite setting a fresh record high, while Bitcoin hovered near $75,700, reflecting investor uncertainty.

(P4) At stake is the passage through the Strait of Hormuz, a vital waterway through which nearly 21% of global oil supplies transit. An extended blockade by Iran threatens to trigger a global energy crisis and further inflame regional tensions, which have already drawn in Israel and Lebanon.

Talks Canceled, Tensions Remain

President Trump, in a post on Truth Social, confirmed the cancellation of his envoys' trip. "We have all the cards. They can call us anytime they want, but you're not going to be making any more 18-hour flights to sit around talking about nothing," the president said. Asked by Axios if this meant a resumption of hostilities, Trump said: "No. It doesn't mean that. We haven't thought about it yet."

The move came shortly after Iranian Foreign Minister Abbas Araghchi arrived in Islamabad for what Pakistan’s foreign ministry described as discussions on “regional peace and stability.” Iranian officials maintained that no direct talks with the American envoys were planned, with messages to be conveyed through Pakistani intermediaries.

The diplomatic back-and-forth comes as the US continues to enforce a naval blockade on Iranian ports and imposes new sanctions on a major China-based oil refinery and approximately 40 shipping companies for transporting Iranian oil, a move designed to choke off Tehran's primary revenue source.

Israel-Lebanon Front Complicates Picture

Adding to the complexity, the fragile security situation on the Israel-Lebanon border deteriorated. Despite a US-brokered three-week extension of a ceasefire, Israeli Prime Minister Benjamin Netanyahu ordered the military to "forcefully attack Hezbollah targets in Lebanon" following alleged ceasefire violations.

Lebanon's health ministry reported that Israeli strikes in the south of the country killed four people on Saturday. The renewed violence undermines broader efforts to achieve regional stability and highlights the risk of the US-Iran conflict expanding to multiple fronts. Mohammed Raad, a senior Hezbollah official, had earlier warned the Lebanese government against direct talks with Israel, stating a peace deal of the kind sought by Trump "will in no way enjoy Lebanese national consensus."

This article is for informational purposes only and does not constitute investment advice.