US and Iran Halt Attacks on Each Other; Hormuz Talks Progress, US Crude Oil Falls Over 6% to $83.10 a Barrel
President Donald Trump decided to suspend airstrikes against Iran to create space for diplomatic efforts. Iran simultaneously stopped its retaliatory strikes, though its stance remained cautious. Following the mutual cessation of hostilities, market fears of a supply disruption in the Strait of Hormuz significantly eased. International oil prices opened sharply lower on Monday, with US crude falling over 6% at one point. The US dollar index also weakened, while gold benefited from gains. These dynamics reflect the diminishing marginal returns of military action and the reopening of a diplomatic window.
Military Actions Hit a Ceiling: Trump Presses Pause
After 13 consecutive nights of intensified airstrikes on Iran, the US military halted operations late Friday night, launching no new attacks on Saturday or Sunday. US officials revealed one core reason for the pause was that the list of targets was nearly exhausted, along with concerns over the rapid depletion of ammunition stockpiles, particularly air defense interceptor missiles in the Middle East. The Chairman of the Joint Chiefs of Staff, General Kane, has privately warned that resuming large-scale operations would risk ammunition reserves. The Commander of US Central Command, Admiral Cooper, also recommended ceasing bombardments near the Strait of Hormuz, stating the operations had reached their limit of effectiveness and continued airstrikes were "pointless," adding that the current pace lacked meaning unless followed by a return to large-scale action.
US Ambassador to the UN, Waltz, publicly stated Trump's move aimed to create room for negotiations. Vice President Vance and other advisors also remained cautious about further escalation. Trump himself said on Sunday that the situation with Iran was progressing well and the two sides were in dialogue, though Iran was not yet ready to reach a deal. The US still retains the option to restart large-scale operations.
Iran Halts Attacks in Tandem but Remains Skeptical: Diplomatic Channels Stay Open
Senior Iranian officials indicated that as long as the US stopped its attacks, Iran would also halt its own strikes, a message conveyed to the American side. Tehran's position remains "a strike in response to a strike." However, Iranian sources emphasized that there is "more skepticism than optimism" regarding the pause in airstrikes, widely viewed as a tactical adjustment rather than a sincere shift, given the deep lessons learned from being "deceived" multiple times in the past.
An Iranian Foreign Ministry spokesperson confirmed that information exchanges between Iran and the US, as well as mediation efforts, are ongoing. The Iran-US memorandum of understanding contained only 14 clauses, but the US has already flagrantly violated several items, marking the "third betrayal" of diplomatic efforts. Meanwhile, negotiations between Iran and Oman on the Strait of Hormuz issue have achieved productive interim results. In technical and political consultations, the two sides engaged in in-depth discussions on common principles and operational mechanisms to ensure safe passage for shipping, emphasizing that arrangements must respect the sovereign rights of coastal states. Officials described the talks as highly constructive, with consultations on restoring normal navigation making positive progress.
Iran's Supreme Leader reaffirmed the strategic policy of supporting Lebanon's Hezbollah, making the preservation of Lebanon's territorial integrity and a complete, unconditional end to Israeli military operations in Lebanon a primary condition for reaching any understanding with the US to end the conflict.
Markets React Rapidly: Oil Prices Sharply Correct, Gold Strengthens
With both the US and Iran suspending mutual attacks, market concerns over supply disruptions eased. International oil prices opened sharply lower on Monday, with US crude falling over 6% at one point to around $83.10 per barrel. Latest data shows WTI crude trading near $83.93 per barrel. Inflation concerns subsequently moderated, potentially easing pressure on the Federal Reserve to raise interest rates. The US dollar index opened lower and weakened, falling 0.23% at one point to 101.22, with the latest reading around 101.3. Spot gold opened over $40 higher, rising 1% at one point to touch $4,096.33 per ounce, with the latest level near $4,095 per ounce.
Summary
The mutual cessation of attacks between the US and Iran marks a phased pause in two weeks of intense airstrikes. The limits of military effectiveness and the reality of ammunition depletion have driven the decision toward a diplomatic shift. Diplomatic channels are not completely closed, and progress in Iran-Oman talks on Strait of Hormuz management offers a potential path for shipping safety. However, the lack of mutual trust between the two sides remains a core obstacle. The rapid pullback in oil prices and the US dollar, alongside gold's safe-haven rise, clearly reflect the market's repricing of geopolitical risk premiums. The key going forward lies in whether the pause can translate into substantive negotiation outcomes and whether the threshold for restarting large-scale operations will be triggered.
Frequently Asked Questions
Why did Trump suddenly pause airstrikes after 13 consecutive nights?
This was primarily based on dual military and diplomatic considerations. The US military's list of targets was nearly exhausted, and continuing the current pace offered diminishing returns. Ammunition, especially air defense interceptor missile stockpiles, faced rapid depletion risks, with warnings from the Chairman of the Joint Chiefs and other senior advisors. Additionally, the pause creates space for diplomatic mediation, with the CENTCOM commander also recommending a stop as operations had reached their effectiveness limit. Trump himself indicated a preference for a strategy to reach an agreement while retaining the option for escalation.
What is Iran's attitude toward the pause in airstrikes? Is this a true ceasefire?
Iran stated that as long as the US stops attacks, it will also suspend its operations, a message conveyed to the American side. It has effectively not opened fire for two consecutive days. However, officials and sources emphasize "more skepticism than optimism," viewing this more as a tactical adjustment rather than a major shift in stance, based on past experiences of being deceived multiple times. Tehran still adheres to the principle of "a strike in response to a strike" and doubts the US's sincerity in fulfilling the memorandum of understanding.
What progress has been made in the Strait of Hormuz negotiations? How will it affect shipping?
Iran and Oman have held multiple rounds of technical and political consultations, achieving interim results on common principles and operational mechanisms for safe passage. The exchanges were described as constructive, and consultations are ongoing. The negotiations emphasize respect for coastal state sovereignty. While the shipping status of the strait has not substantially changed yet, the positive progress helps reduce the risk of blockades or disruptions and is a key factor in cooling market concerns.
Why did oil prices fall sharply on Monday? What does this imply for inflation and Fed policy?
The mutual halt in US-Iran attacks directly alleviated market panic over a potential Strait of Hormuz shipping shutdown and supply shortages, causing risk premiums to rapidly unwind. US crude fell over 6% at one point to around $83. Lower oil prices help reduce global inflationary pressures, thereby easing the urgency for the Federal Reserve to raise interest rates further. The concurrent weakening of the US dollar also reflects a rebound in risk appetite and a fine-tuning of policy expectations.
Given the current situation, where might things head next?
The critical window lies in whether diplomacy can make substantive progress. Information exchanges and mediation between Iran and the US are still ongoing, and the Oman channel provides a buffer. If negotiations achieve a breakthrough, the pause could be extended. If progress stalls or Iran fails to show sufficient sincerity, the US can quickly restart large-scale operations. Iran's conditions, including support for Hezbollah and ending Israeli operations in Lebanon, add complexity. Markets will continue to focus on actual shipping restoration and statements from both sides, potentially leading to increased volatility in oil prices and gold.
Beijing time 07:53, US crude oil now reports at $84.74 per barrel.
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Editor: Guo Jian