Trump says Iran talks are happening now and markets react fast, but officials in Tehran tell a very different story

Oil prices dropped sharply after President Trump announced that negotiations to end the ongoing conflict are actively underway, a claim Tehran quickly disputed. As reported by BBC News, Brent crude fell 5% to $99.29 a barrel while US-traded oil dropped over 5.5% to $88.41, reflecting how sensitive global markets have become to any development out of the Middle East.

Trump stated on Tuesday that talks are “progressing” and that the US is in discussions with parties who “want to make a deal so badly.” He said Vice President JD Vance and Secretary of State Marco Rubio are involved, and claimed that US-Israeli strikes on Tehran have produced “regime change.”

Officials in Tehran told a different story. Iran’s Foreign Ministry spokesman Esmail Baghaei dismissed the claims as “fake news” on Tuesday night, stating that “no one can trust US diplomacy.” Another official, Ebrahim Zolfaqari from Iran’s unified command, responded by asking whether the US was “negotiating with yourself.”

The market reaction suggests investors are pricing in a reduced chance of prolonged disruption

Asian markets responded positively on Wednesday. Japan’s Nikkei 225 and South Korea’s Kospi each rose more than 2%, with Australia’s ASX 200 up over 1.8% and Hong Kong’s Hang Seng and Shanghai’s composite gaining around 1%. Singapore Management University’s Goh Jing Rong cautioned the oil price move will only hold with “credible follow-through,” including safe passage for vessels through the Gulf.

Iran’s mission to the United Nations posted on X that “non-hostile vessels” would be permitted through the Strait of Hormuz, provided they coordinate with Iranian authorities and do not support acts of aggression against Iran. The strait typically handles around 20% of the world’s daily oil and liquefied natural gas traffic, and energy prices have soared since Iran effectively blocked it.

The recent price volatility follows a period in which Trump had announced a five-day pause on strikes targeting Iranian energy infrastructure, a move that itself followed a stark ultimatum over the strait. Despite the talk of negotiations, Iran and Israel continued exchanging missile strikes.

The Israel Defense Forces announced a new wave of strikes in Tehran and also warned residents in the southern suburbs of Beirut to evacuate as strikes on Hezbollah continued. The New York Times, Reuters, and Israel’s Channel 12 have reported, citing unnamed sources, that the US handed Iran a 15-point plan including demands that the Strait of Hormuz be opened and recognized as a free maritime zone, with sanctions relief offered in return, though the document has not been independently verified.

BlackRock CEO Larry Fink warned that crude hovering above $100, or closer to $150, for years without a resolution would have “profound implications” on the global economy and likely trigger a “stark and steep recession.” Shell CEO Wael Sawan separately warned that oil shortages could hit Europe next month, after already affecting South Asia and Southeast Asia.