Trump Cancels Major Iran Strike to Pursue Diplomatic Deal

President Donald Trump abruptly canceled a planned large-scale military campaign against Iran's energy infrastructure, which he described as potentially the biggest attack since World War II. Trump stated the decision followed requests from Iranian officials and pressure from Gulf allies, including Saudi Arabia, Qatar, and the United Arab Emirates. The proposed deal seeks the immediate and total reopening of the Strait of Hormuz and the elimination of Iran's nuclear threat, with negotiations scheduled to begin Monday, August 3, 2026.

Iranian officials have disputed claims of direct talks with Washington. Foreign Ministry spokesperson Esmaeil Baghaei characterized Trump's statements as psychological warfare and denied that any delegations are being hosted. Instead, Iran is negotiating a new Traffic Separation Scheme with Oman to establish a neutral middle-lane shipping route. Tehran maintains that the waterway will not return to its pre-war status, citing U.S. naval blockades and treaty violations as the cause for the current closure.

President Masoud Pezeshkian emphasized that the 14-point Islamabad Memorandum, an interim agreement mediated by Pakistan in June 2026, should serve as the center of gravity for future relations. This follows a volatile period involving U.S. bombardments of Iran and retaliatory drone strikes on Gulf nations.

The diplomatic shift triggered a sharp decline in global oil prices, with Brent crude dropping over 7% on Monday. Simultaneously, the U.S. and Japan conducted a joint currency intervention to support the yen, which had reached 40-year lows. U.S. Treasury Secretary Scott Bessent affirmed that Washington remains ready to intervene further to stabilize markets.