Where to begin

West Texas Intermediate crude futures traded narrowly around $80.40 per barrel early Tuesday (August 4) in Asia, pausing after a more than 6% drop in the prior session. President Donald Trump stated on Monday that the United States and Iran are negotiating an end to a five-month conflict, calling it a "last chance" for Tehran to secure a favorable deal. Iran swiftly denied any such talks or scheduled meetings. The conflicting statements from both sides cast doubt on the near-term prospect of a diplomatic resolution to the conflict, sending oil prices lower on the news.

Trump signals negotiations and issues ultimatum

Trump told reporters in the Oval Office on Monday that "negotiations are ongoing," claiming they were initiated at the request of Iran, Saudi Arabia, the United Arab Emirates, and Qatar. He warned this was "their last chance to sign a good deal." He also predicted the Strait of Hormuz could "open as early as tomorrow," adding that the matter would be "resolved very soon" regardless of the outcome. Trump outlined a two-step priority: first, opening the strait, and second, pushing for a denuclearized Iran, expressing pride in giving Iran "one last chance before it is completely destroyed."

Iran categorically denies: no talks, no arrangements

Iran's response directly contradicted the US. Foreign Ministry spokesperson Baghaei stated on Monday morning that Iran is currently not engaged in any negotiations with the United States and has no meetings scheduled. He added that Iran has no plans to host or send negotiating delegations. Aside from Foreign Minister Araghchi, who is on a religious pilgrimage to Iraq and unavailable until at least the end of the week, all negotiating personnel are in the country. A senior Iranian source confirmed that no meetings are currently arranged.

Threat, retreat, then threaten again

Monday's events continue a pattern Trump has employed since the US and Israel launched "Operation Epic Fury" five months ago. He repeatedly threatens major military action, only to cancel it by citing diplomatic engagement. Just this weekend, Trump called off a "large-scale strike" on Iran he claimed to have approved, pivoting to announce negotiations instead. Since a June memorandum of understanding aimed at ending the conflict collapsed in early July, Iran has publicly refused dialogue with Washington. Analysts note that escalating US pressure often draws stronger Iranian retaliation against US forces in the Middle East, regional allies, and international shipping, after which Trump typically steps back.

Trump counters again, stressing control of the Strait

In response to Iran's denial, Trump posted on Truth Social, accusing the Iranian leadership of "extreme hypocrisy" and claiming Iran had actually requested talks, with more contacts expected "soon." He reiterated that the US Navy has full control of the Strait of Hormuz, warning: "American steel wall! Nothing can enter Iran unless we allow it; nothing will enter unless a deal is reached or a complete surrender occurs." This hardline stance creates a subtle tension with the White House's earlier claim that "negotiations are underway."

Market reaction: oil prices fall

International oil prices fell sharply on Monday following Trump's decision to pause military action and his comments on talks. Brent crude futures dropped over 7% to around $83.52 per barrel. WTI crude had already slumped more than 6% on expectations of progress in US-Iran negotiations and reduced geopolitical risk. Markets remain on edge, with oil price volatility likely to increase if the US-Iran dynamic continues to cycle through verbal confrontations, denials, and renewed threats. As of 8:04 AM Beijing time on August 4, WTI crude futures were trading at $80.44 per barrel.