Trump Warns Iran of Major Consequences Without Prompt Deal

President Donald Trump warned that he might resume strikes on Iran soon as part of efforts to secure a deal to conclude the conflict, following his announcement that he had just called off a US attack.

“I hope we don’t have to engage in war, but we might need to inflict another significant blow,” Trump told reporters on Tuesday. When asked about the timeframe, he replied: “Well, I’m referring to two or three days, possibly Friday, Saturday, or Sunday. Maybe something early next week — a limited window.”

Trump’s remarks have once again brought forth the possibility of reigniting hostilities with Iran, which has so far declined to comply with Trump’s demands to scrap the remaining aspects of its nuclear program after weeks of strikes that began in late February. However, the president has repeatedly indicated — and then refrained from — renewed military action since the truce was established on April 8.

The conflict has closed off the Strait of Hormuz, a crucial passage for oil and gas transportation, leading to a surge in global energy prices and inflation. Yields on the US Treasury’s long-term bonds climbed to their highest levels in nearly two decades due to concerns about the macroeconomic ramifications of the Middle East conflict.

During a Tuesday afternoon address, Vice President JD Vance had a somewhat more optimistic perspective on the negotiations, even as he also hinted at the potential for renewed strikes. “We believe we’ve made significant progress, and that the Iranians are looking to reach a deal,” he said, adding that “option B” would be to restart military operations.

“But that’s not the president’s preference,” he continued. “And I don’t believe that’s what the Iranians desire either.”

Despite losing numerous senior leaders and a significant portion of its military capabilities due to US and Israeli airstrikes, Iran’s government has remained resilient, causing frustration among US officials by maintaining control over Hormuz, which has driven fuel prices in the US to their highest levels in nearly four years.

On Monday, Trump stated he postponed a planned attack on Iran, which was scheduled for Tuesday, at the request of Saudi Arabia, Qatar, and the United Arab Emirates. Previously, the president has cited requests from allies and partners, including mediator Pakistan, as influencing his shifts in policy regarding the Iran conflict.

Brent crude oil prices dropped around 1% on Tuesday, trading above $110 per barrel following Trump’s announcements late Monday. The benchmark has still increased by over 50% since the conflict began with US-Israeli strikes on Iran, leaving traders on high alert regarding the potential for renewed hostilities.

Shipments through Hormuz have decreased once again, although traders are keenly observing whether the NATO alliance will assist in ensuring safe passage for ships if the waterway is not reopened by early July.

While Trump’s comments typically influence financial markets regarding Iran, market analysts have noted that this impact appears to be diminishing as the president frequently issues threats that he does not act on.

“These verbal assertations from Trump used to cause a significant bearish reaction in prices, but their impact now seems to be weakening, unless backed by action,” remarked Bjarne Schieldrop, chief commodities analyst at SEB AB. “From what we can observe, no real advancement has been made in negotiations between the US and Iran, with both parties staunchly holding onto their prior demands.”

The fragility of the truce was highlighted on Sunday when a drone struck the UAE’s Barakah nuclear energy plant, igniting a fire at the facility and necessitating the use of emergency generators.

The United Nations’ nuclear watchdog announced late Monday that normal operations had resumed at Barakah, alleviating safety concerns regarding the largest atomic facility in the Middle East.

Tehran has indicated it may launch strikes against its Gulf neighbors again if the US resumes its military actions.

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