The US-Iran standoff has entered a new critical juncture. With negotiations at an impasse and military deployments continuing to advance, Trump has repeatedly issued tough signals, while Iran, on one hand, warns of a "more destructive" counterattack and, on the other, says it has not closed the door to diplomacy.

According to Xinhua, on October 4, Iranian Foreign Minister Araghchi said that although Iran remains willing to pursue a "just and dignified" solution through diplomatic channels, if the enemy resorts to military action again, Iran will deliver a response "more destructive" than ever before.

Iranian Foreign Ministry spokesperson Baghaei said that the latest proposal conveyed by the US through Qatar is "basically consistent with previous positions," mainly involving the nuclear issue, while Iran's current focus is the Strait of Hormuz issue. These two parallel logics make it difficult for the market to judge where the situation is heading.

Trump told reporters outside the White House over the weekend, "On Iran, I will make a decision. Either the easy way or the hard way." He did not disclose a specific timetable, leaving only the line, "You'll see." At the same time, according to Axios, last Friday US Vice President Vance, Secretary of State Rubio, Defense Secretary Pete Hegseth, Special Envoy Steve Witkoff, CIA Director John Ratcliffe, and Chairman of the Joint Chiefs of Staff Admiral Dan Caine gathered at Camp David for a secret meeting, with the Iran situation and the Yemen Houthi issue both on the agenda.

Bank of America noted that the current Brent price of about $103 sits exactly between the two scenarios of "sporadic conflict" and "intense engagement." This week, six threads—Trump's decision, Iran's response via Qatar, the direction of the Yemen situation, tanker attack dynamics, Iran's domestic pressure, and cross-market macro risks—will jointly determine which scenario range oil prices move into. The boundary between war and talks may become clear this week.

Trump keeps up pressure as military leverage gathers in the Middle East

On the diplomatic front, Trump's remarks escalated step by step last week.

According to CCTV, in an exclusive interview with Time magazine, Trump clearly stated that if the US and Iran cannot reach an agreement satisfactory to the US, military action could resume after the midterm elections; later the same day, while traveling to Oklahoma, he again told reporters:

They either sign a very fair deal, or they won't exist.

Xinhua reported that Iranian Foreign Minister Araghchi said on the 4th that during the recent trip to New York for the UN General Assembly, the Iranian delegation proposed a plan aimed at resolving differences and ending the current state of hostility with the US. If the plan is accepted by the US, the Strait of Hormuz will reopen within 7 days.

Araghchi said the US has already suffered failures in both the military and diplomatic fields, and new sanctions against Iran are equally doomed to be futile, expressing hope that the US will choose a wise and rational path. He said only a solution found on the basis of justice and fairness through diplomacy and negotiation is the way out.

However, US forces are still advancing a new round of deployments. According to The Wall Street Journal, the "Theodore Roosevelt" carrier strike group has departed from San Diego, and the "Makin Island" amphibious ready group has also set out. The two formations together carry more than 7,000 sailors and about 2,000 Marines and are expected to arrive in the Middle East around late October.

By then, the US will have formed a posture of three carrier strike groups near Iran. According to Bloomberg, this level of force concentration has not been seen since the opening phase of the Iraq War in 2003.

Previously, according to Bloomberg, Iranian officials themselves believe the probability of reaching an agreement before the November 3 midterm elections is extremely low, while the "probability of escalation after the election is very high." This means the diplomatic window from this week to next week may be the last relatively controllable period for negotiations before the midterm elections.

Yemen fighting continues, putting the second energy corridor at risk

The complexity of the situation rose further over the weekend.

According to CCTV, the Yemen Houthi armed group said in a statement on the evening of October 3 local time that in response to Saudi airstrikes on Sanaa and other parts of Yemen, the Houthis used multiple ballistic missiles and drones that day to strike Aramco targets in the Saudi capital Riyadh, claiming the operation "successfully achieved its objectives," "hit the targets and caused fires."

At the same time, according to Axios citing two US officials, Saudi Arabia is planning to launch a large-scale military operation against the Houthis within the next few days, targeting the coastal areas that have allowed the Houthis to control the Bab el-Mandeb Strait, a key maritime passage.

The report said the operation will be led by ground forces of the Yemeni government, supported by Saudi air power, with a focus on striking the Houthis' strategic footholds along the coast.

The core interest behind this conflict also points to energy. Last month, the Houthis captured the Bab el-Mandeb Strait and about 150 kilometers of Red Sea coastline, and this strait is precisely Saudi Arabia's key alternative route for exporting crude to the West while bypassing Hormuz.

Talks deadlocked, seven conditions become the biggest obstacle

At the negotiation level, differences remain significant. Iranian Parliament Speaker and chief negotiator Mohammad Baqer Qalibaf said, according to Reuters:

The Strait of Hormuz will not reopen unless our seven conditions are met. The era in which the US delays the negotiation process and unilaterally makes demands is over.

Iran's seven conditions include: lifting the maritime blockade, returning frozen assets, canceling sanctions on Iran's oil exports, stopping actions based on military threats, ending the war against Iran and its regional allies, withdrawing US forces around Iran's borders, and compensating for war losses and committing not to interfere with Iran's nuclear and missile capabilities.

Trump has previously clearly rejected a plan based on the above conditions to reopen the strait within 7 days, believing Iran's proposal is "far from enough."

Baghaei said Iran will provide feedback after "adding several detailed comments" on the proposal conveyed by the US through Qatar. According to Reuters, citing an informed official, the dispute between the two sides is not about the content of the steps, but about the sequence in which each step is advanced. The diplomatic window has not completely closed, but the passage is narrowing.

Why are oil prices still above $100? Goldman Sachs gives the answer

Facing the market puzzle of "why oil prices are still above $100 when Gulf exports have returned to pre-war levels," Goldman Sachs commodities trading strategist Thomas Evans explained in a weekend report:

Supply-side tightness has eased somewhat, but the risk premium has not faded. Futures and spreads remain at recent highs because the market is still pricing in a considerable risk premium.

Thomas Evans estimated the calendar spread at about $20 to $25 per barrel. At the same time, he further emphasized:

The real risk is that once a strike causes Gulf shipments to fall back below 50% within a few days, the current buffer has been greatly thinned, and inventories and prices will jump sharply.

According to Bloomberg, Energy Aspects data show that global oil inventories have fallen by more than 400 million barrels since March, with the total of about 4.3 billion barrels at a five-year low. Tanker freight rates on the Persian Gulf-to-China route have exceeded $1.2 million per day. Since last Thursday, at least four tanker attacks have occurred in the southern waters off Oman. If the UK Maritime Trade Operations (UKMTO) continues to issue warnings at this frequency, the current supply recovery maintained by "shadow exports" will face a severe test.

Jerome Dortmans, Goldman Sachs' co-head of global oil and products trading, said bluntly:

Iran has a significant ability to disrupt shipments through the Strait of Hormuz... The US announcement of sending a third carrier strike group and 10,000 Marines to the region is definitely not a signal Iran can ignore.

"Decision week" arrives? The easy way or the hard way, the market is already pricing it

The Bank of America commodities team raised its Brent base forecast for the second half of 2026 from $83 to $95, citing the reason that "sporadic conflict may continue through the end of the year." The current Brent price of about $103 sits exactly between the two scenarios of "sporadic conflict" and "intense engagement"—which also broadly matches the assessment of Camp David participants. Bank of America's full scenario path is as follows:

Reaching an agreement and restoring the memorandum of understanding (low probability): Hormuz shipments recover to more than 10 million barrels per day, and Brent averages $83 in the second half of 2026;

Maintaining sporadic conflict (base case): intermittent shipments of about 5 million barrels per day, and Brent averages $95 in the second half of 2026;

Returning to intense engagement (low probability): Brent rises to $120;

War spreading to energy infrastructure (tail risk): Brent averages $150 or even higher.

According to Bank of America's analysis, the following threads this week will jointly determine which scenario range oil prices fall into:

First, Trump's "decision." Over the past five days he has released "You'll see" three times. Whether the Camp David meeting formed a substantive decision and whether an official notice is released to the public is the most core observation point this week.

Second, Iran's response via Qatar. Baghaei said the supplementary comments still need to be conveyed to Washington through Qatar. The real disagreement between the two sides lies in the sequence of steps, not the content of the terms themselves—whether this sticking point shows any loosening this week will determine whether the negotiations truly enter a substantive stage.

Third, the direction of the Yemen battlefield. The Houthis are advancing toward the last road between Taiz and Aden. Whether Saudi military operations along the Bab el-Mandeb coast can make progress and whether Riyadh or Khurais suffer confirmed strikes will directly affect security expectations for the second energy corridor.

Fourth, tanker attack dynamics in southern Oman. At least four tankers have been attacked since last Thursday. If UKMTO continues to issue warnings at this frequency, the supply recovery maintained by shadow exports will be materially affected.

Fifth, Iran's domestic pressure. Iran's oil minister position is vacant, the rial has fallen to 2.7 million per US dollar, and the inflation rate is approaching 90%. The degree of internal pressure in Tehran is also an important variable in judging whether its negotiating bottom line can loosen.

Sixth, cross-market macro risks. The Federal Reserve will release the FOMC meeting minutes on Wednesday, with 10-year and 30-year US Treasury auctions also taking place during the same period; China will return to the market on Thursday after the Golden Week holiday, compounded by the policy backdrop of a suspension of fuel exports in October. Goldman Sachs pointed out that oil prices are currently "linked to interest rates far more than usual," and the transmission of the above macro factors to crude oil cannot be ignored.

Bloomberg cited Chatham House researcher Aniseh Bassiri Tabrizi's judgment in conclusion:

Both sides generally want a deal, but they are moving further apart.

Above $103 oil, the market has already given its own judgment—sporadic conflict will continue, but the boundary between war and talks will become clearer this week. As Trump himself said: "You'll see."