On Monday, oil prices briefly touched $120 a barrel before falling back after President Trump told CBS the “war is very complete, pretty much”, claiming Iran has “no navy, no communications, no air force.”
Earlier, however, his Defense Secretary Pete Hegseth had said the war was just beginning. Asked about the contradiction, Trump said both could be true: “It’s the beginning of building a new country.”
In the ten days since the US and Israel launched strikes on Iran, the stated American position has moved from “open to negotiations” to “unconditional surrender” to “over soon” to “hit harder” to “building a new country.”
For anyone attempting to read Washington’s intentions, the official signaling has been indistinguishable from noise.
The practical question now is whether the two sides can find a durable exit that ends hostilities and restores a modicum of stability, including to global energy markets, which have been whipsawed by the violence. On current evidence, though, the answer is not encouraging.
The US side of the problem is straightforward. Trump’s stated positions do not reliably indicate policy direction. He responds to market pressure (oil prices, stock selloffs) more than to strategic logic.
The 5% drop in crude prices after his CBS interview suggests that markets know this and are trading on Trump’s mood, not on a credible de-escalation pathway.
The strikes have killed Iran’s Supreme Leader Ali Khamenei, dozens of senior officials and military commanders, and – as Trump himself acknowledged – destroyed most of the people the US would need to negotiate with. “Most of the people we had in mind are dead”, he told reporters. “Pretty soon we are not going to know anybody.”
Domestic pressure has not yet produced a constraint. Seven US service members have been killed – the first American combat deaths in the Middle East since the withdrawal from Afghanistan – and 18 others seriously wounded.
Congress attempted to reassert its war powers and failed – the 8th failure for the Senate since June 2025. Parts of Trump’s own political base have expressed frustration – conservative host Megyn Kelly posted “I honestly can’t believe we’re doing this again” – but the split has not reached critical mass.
As things stand, the economic channel is the more likely pressure point with oil above $100 per barrel, Goldman Sachs projecting inflation could snap back to 3% if the war drags on and the 2026 midterms approaching. Trump built his political brand in part on reversing Biden-era inflation. A sustained energy shock threatens that brand more directly than seven dead soldiers.
The Iranian side is harder. Two weeks ago, Iran was negotiating with the US and seemed to believe a deal was “within reach.” Oman’s Foreign Minister said on 27 February that a breakthrough had been reached: Iran had agreed to never stockpile enriched uranium, to full IAEA verification, and to downgrade its enriched material to the lowest level possible.
A fourth round of talks was scheduled but the US-Israeli strikes began the next day. This is the second time in less than a year that Iran has been attacked during or immediately after negotiations – the Twelve-Day War in June 2025 followed a similar pattern.
Foreign Minister Araghchi framed the lesson bluntly: “Negotiate with the US when we negotiated with them twice, and every time they attacked us in the middle of negotiations?” The appointment of Mojtaba Khamenei – the late supreme leader’s son – as successor signals that hardliners are consolidating control. A return to the negotiating status quo ante as of late February appears, for now, highly unlikely.
The result will be a conflict in which both sides may have incentives to de-escalate but neither can easily do it. Trump cannot commit to terms because his own positions shift daily.
Iran – which has ruled out a ceasefire or surrender while attacks continue – cannot return to diplomacy because the demonstrated pattern has made talks politically toxic for any new leadership. The diplomatic infrastructure itself has been destroyed, including the Omani channel, the negotiating counterparts and the verification frameworks that took years to build.
For Asian economies in particular, this is not an abstract geopolitical question. The Strait of Hormuz, now effectively closed, carries roughly 60% of Asia’s crude oil imports. Fuel-importing Thailand’s stock exchange halted trading last week after an 8% plunge.
QatarEnergy – which supplies 45% of Singapore’s LNG imports and 28% of Thailand’s – has suspended exports for the first time in 30 years. China has ordered its major refineries to halt diesel and petrol exports, effectively transmitting its own energy insecurity to smaller neighbors that depend on Chinese refined products. Myanmar and Pakistan have introduced fuel rationing.
If the war escalates in the form of a sustained Hormuz closure, expanded Iranian attacks on Gulf energy infrastructure or a US-Israeli ground operation in Iran, the consequences for the region would likely exceed the disruptions caused by the Russia-Ukraine war.
If it recedes, the recovery may not be straightforward either. Insurance premiums, shipping reroutes and broken supply contracts do not snap back overnight.
And the broader precedent – that a negotiating partner can be struck mid-negotiation, not once but twice – will factor into how states across the region reassess the credibility and reliability of US-led diplomatic frameworks for years to come.
Lam Duc Vu is a Vietnam-based risk analyst focused on regional trade and geopolitics
