Author: Bao Yilong, Wall Street CN
The US-Iran standoff has entered a new critical juncture. Against the backdrop of stalled negotiations and continued military deployments, Trump has repeatedly sent tough signals, while Iran, on the one hand, warns of a "more destructive" counterattack, and on the other, says it has not closed the door to diplomacy.
According to Xinhua News Agency, on October 4, Iranian Foreign Minister Araghchi said that although Iran remains willing to seek a "just and dignified" solution through diplomatic channels, if the enemy once again resorts to military action, Iran will respond with a "more destructive" counterattack than ever before.
Trump told reporters outside the White House last weekend, "On the Iran issue, I will make a decision. Either the easy way or the hard way." He did not disclose a specific timetable, leaving only the words "You'll see." Meanwhile, according to Axios, last Friday, US Vice President Vance, Secretary of State Rubio, Secretary of Defense 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 armed forces issue both on the agenda.
Bank of America pointed out that the current Brent price of about $103 happens to fall 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 developments, Iran's domestic pressure, and macro cross-risk—will jointly determine which scenario range oil prices move toward. The boundary between war and talks may become clear this week.
Trump Continues Diplomatic Pressure, Military Chips Gather Toward the Middle East
Wall Street CN mentioned, according to CCTV, Trump said in an exclusive interview with Time magazine that if the US and Iran cannot reach an agreement satisfactory to the US, military action may resume after the midterm elections; later that same day, on his way to Oklahoma, he again told reporters:
They will either sign a very fair agreement, or they will cease to exist.
Xinhua News Agency reported that Iranian Foreign Minister Araghchi said on the 4th that during his recent trip to New York to attend 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 adopted 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 in the past, and new sanctions against Iran are likewise doomed to be futile, and he hopes the US can choose a wise and rational path. He said, only by seeking a solution through diplomacy and negotiation on the basis of justice and fairness is there a way out.
At the same time, the US military is 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 off. 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 deployment 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 also believed that the possibility of reaching an agreement before the November 3 midterm elections was extremely low, and that "the possibility of escalation after the election is very high." This means that the diplomatic window from this week to next week may be the last relatively controllable period for negotiations before the midterm elections.
Yemen War Continues, Second Energy Corridor in Jeopardy
The complexity of the situation rose further last weekend.
Wall Street CN mentioned, CCTV News reported that the Yemen Houthi armed forces issued a statement on the evening of October 3 local time saying that in response to Saudi airstrikes on Sanaa and other parts of Yemen, the Houthi armed forces that day used multiple ballistic missiles and drones to strike targets of Aramco in Riyadh, the Saudi capital, and claimed the operation "successfully achieved its objectives," "hit the targets and caused fires."
Meanwhile, according to Axios citing two U.S. officials, Saudi Arabia is planning to launch a large-scale military operation against the Houthi armed group in the coming days, with the goal aimed directly at the coastal areas that have enabled 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 in the coastal areas.
The core interest at stake in this conflict is also 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 oil to the West while bypassing Hormuz.
Negotiations Stalled, Seven Conditions Block Hormuz
At the negotiation level, differences remain significant. Iranian Parliament Speaker and chief negotiator Mohammad Baqer Qalibaf, according to Reuters, said:
The Strait of Hormuz will not reopen unless our seven conditions are met. The era in which the United States 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 justified by military threats, ending the war against Iran and its regional allies, withdrawing U.S. forces around Iran's borders, and compensating for war losses and committing not to interfere with Iran's nuclear and missile capabilities.
Trump had previously explicitly rejected a plan based on the above conditions to reopen the strait within 7 days, believing that Iran's proposal was "far from enough."
Baghai said that Iran will provide feedback after "adding several detailed opinions" to the plan conveyed by the United States through Qatar. According to Reuters citing an official familiar with the matter, the disagreement 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 yet fully closed, but the passage is narrowing.
Why Are Oil Prices Still Above $100? Goldman Sachs Gives the Answer
Faced with the market confusion of "Gulf exports have returned to pre-war levels, so why are oil prices still above $100," Goldman Sachs commodities trading strategist Thomas Evans explained in a weekend report:
Tightness on the supply side 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 estimates the futures-cash 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 at that point inventories and prices will jump sharply.
According to Bloomberg, Energy Aspects data show that global oil inventories have decreased 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 United Kingdom Maritime Trade Operations (UKMTO) continues to issue warnings at this frequency, the current supply recovery maintained by "shadow exports" will face a severe test.
Goldman Sachs global co-head of oil and products trading Jerome Dortmans said bluntly:
Iran has a significant ability to disrupt shipments through the Strait of Hormuz... The United States announced the deployment of a third carrier strike group and 10,000 Marines to the region, which is definitely not a signal Iran can ignore.
Is "Decision Week" approaching? The easy path or the hard path, the market is already pricing it in
The Bank of America commodities team raised its baseline forecast for Brent in the second half of 2026 from $83 to $95, citing the reason that "sporadic conflict may continue until the end of the year."The current Brent price of about $103 happens to fall between the two scenarios of "sporadic conflict" and "intense engagement". The complete scenario path given by Bank of America is as follows:
- Agreement reached, memorandum of understanding restored (low probability): Hormuz shipments recover to more than 10 million barrels per day, and Brent averages $83 in the second half of 2026;
- Sporadic conflict maintained (baseline scenario): intermittent shipments of about 5 million barrels per day, and Brent averages $95 in the second half of 2026;
- Intense engagement resumes (low probability): Brent rises to $120;
- War spreads to energy infrastructure (tail risk): Brent averages $150 or even higher.
According to Bank of America's analysis, the following clues this week will jointly determine which scenario range oil prices fall into:
First, Trump's "decision." Over the past five days, he has said three times, "You will see." Whether the Camp David meeting produces a substantive decision and whether an official announcement is released to the public is the most central observation point this week.
Second, Iran's response through Qatar. Baghaei said the supplementary opinions still need to be conveyed to Washington through Qatar. The real disagreement between the two sides lies in the sequence of advancing each step, rather than the content of the terms themselves — whether this sticking point can show any loosening this week will determine whether the negotiations truly enter a substantive stage.
Third, the direction of the battlefield in Yemen. The Houthi armed forces are advancing toward the last road between Taiz and Aden. Whether Saudi military operations along the coast of the Bab el-Mandeb Strait can make progress, and whether Riyadh or Khurais is confirmed to have been struck, will directly affect the security expectations for the second energy corridor.
Fourth, the dynamics of tanker attacks in southern Oman. Since last Thursday, at least four tankers have been attacked. If UKMTO continues to issue warnings at this frequency, the supply recovery maintained by shadow-line exports will be substantially impacted.
Fifth, Iran's domestic pressure. Iran's oil minister position is vacant, the rial exchange rate has fallen to 2.7 million to 1 U.S. dollar, and the inflation rate is approaching 90%. The degree of internal pressure in Tehran is also an important variable for judging whether its negotiating bottom line can loosen.
Sixth, macro cross risks. The Federal Reserve will release the FOMC meeting minutes on Wednesday, and there will also be 10-year and 30-year U.S. Treasury auctions during the same period; China will return to the market on Thursday after the end of the Golden Week holiday, combined with the policy background of a suspension of fuel exports in October. Goldman Sachs pointed out that oil prices are currently "linked to interest rates to a far greater extent than usual," and the transmission of the above macro factors to crude oil trends cannot be ignored.
Bloomberg cited the judgment of Chatham House researcher Aniseh Bassiri Tabrizi in conclusion:
Both sides generally want to reach an agreement, but they are moving further and further apart from each other.
Above an oil price of $103, 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 will see."
