Trump Cancels Major Iran Strikes to Pursue Diplomatic Deal

President Donald Trump abruptly canceled a planned military campaign against Iran's energy infrastructure on August 3, 2026, describing the aborted operation as potentially the "biggest attack since World War II." Trump announced that fresh negotiations with Iran would begin on Monday to address Tehran's nuclear capabilities and the reopening of the Strait of Hormuz. He stated the reversal followed pressure from Gulf allies, including Saudi Arabia, Qatar, and the United Arab Emirates, as well as requests from Iranian officials.

Iranian Foreign Ministry spokesperson Esmail Baghaei rejected U.S. claims regarding a broad deal on the waterway, asserting that negotiations with Oman over shipping routes are a bilateral matter that "does not concern any other party." Baghaei noted that while Iran is nearing an understanding with Oman on a route that respects sovereign rights and security, the strait would not return to its pre-February 2026 status.

The diplomatic shift triggered a sharp decline in global energy markets, with Brent crude prices dropping more than 7% to approximately $83 per barrel. Simultaneously, seven OPEC+ members agreed to increase production by 188,000 barrels per day starting in September.

Separately, the U.S. and Japan conducted a joint currency intervention to support the Japanese yen against the U.S. dollar. Treasury Secretary Scott Bessent affirmed that Washington remains ready to intervene further to curb the dollar's rise to 40-year highs. This move pressured Japanese export-heavy stocks, causing a 1.1% decline in the Nikkei 225 index.