The U.S.-Iran Deadlock Starts to Unwind as Oil Prices Break Above $100 and Then Fall
The geopolitical pendulum of the Middle East swings violently again, with market sentiment flipping rapidly between panic and expectations. Recently, as the U.S.-Iran conflict entered a war-of-exhaustion phase, international oil prices briefly surged past the psychological barrier of $100 per barrel, triggering global inflation jitters. However, the latest diplomatic developments suggest the deadlock is showing signs of loosening. According to information provided by an Iranian source cited by China Media Group (CMG), Qatar and Pakistan—acting as mediators—have sent signals to Tehran that Washington is prepared to restart negotiations and reach an agreement, and that it is taking a serious approach to moving this process forward. The market quickly picked up on the news, and international oil prices promptly fell.
For a Middle East situation that has long been under extreme pressure, this is not only a diplomatic breather, but also a re-pricing of the geopolitical risk premium.
Looking back at the evolution of this round of conflict, the core issue has always revolved around the “Islamabad Memorandum of Understanding.” Previously, the U.S. showed a cold attitude toward the memorandum and launched repeated military strikes against Iran. In response, Iran blocked the Strait of Hormuz and carried out retaliatory actions against U.S. targets. Meanwhile, Yemen’s Houthi forces significantly escalated their offensives in the Red Sea and within Saudi territory; on September 19, even thick smoke appeared at the airport in Riyadh, and the security situation deteriorated rapidly.
This “multi-front warfare” scenario has sharply increased pressure on all sides. On September 19, Rezaei, Secretary of Iran’s Supreme National Security Council, confirmed in an interview with Al Jazeera that Iran is holding consultations with Pakistan and Qatar. Qatar has passed Iran’s “conditions” to the U.S., and Iran is currently waiting for a response from the Trump administration. These conditions include ending the war on all fronts, releasing frozen funds, and ending the maritime blockade. Notably, despite the tension, Iran has not announced withdrawing from the Non-Proliferation Treaty; Rezaei emphasized that the decision depends on Washington’s actions. This stance of “fighting and negotiating at the same time” reflects that both sides are still making room for a final political resolution.
From a deeper logic standpoint, what is bringing both sides back to the negotiating table is not simply goodwill, but an unbearable reality-cost. First comes the exhaustion of fiscal and military resources. The U.S. military disclosed to Congress that, as of September 3, military actions targeting Iran had already resulted in at least $45.1 billion in spending, roughly equivalent to more than 300 billion yuan RMB. This hefty bill does not yet include hidden costs such as allied losses, personnel casualties, and damage to credibility. Even more severe is the depletion of U.S. ammunition—especially air defense missiles—more than half of which were consumed during months of exchanges, and there have even been cases where some missiles failed to intercept targets because the U.S. was reluctant to use them.
Second is economic blowback. The surge in oil prices directly hits Americans’ day-to-day living standards, especially households that rely on gasoline-powered cars. In the U.S. political context, high oil prices are a major enemy of the ruling party. If the Republicans lose in the midterm elections, policy room for the latter half of the Trump administration will be significantly squeezed. Finally, there is the risk of the conflict spiraling endlessly. The intense confrontation between the Houthis and Saudi Arabia puts the U.S. in a dilemma of being pulled into a larger-scale regional war. As Saudi Arabia is a U.S. ally, its homeland security is threatened, forcing Washington to reassess the depth and breadth of its involvement.
Under the triple pressure of “can’t afford to fight, can’t afford to drag it on, can’t afford to lose,” negotiations become the only viable exit.
During this process, the role of third-party mediators is crucial. As traditional mediators, Pakistan and Qatar shuttle back and forth between the two sides, working to build a bridge for communication. In addition, China’s diplomatic moves also deserve attention. Three days ago, Iranian Foreign Minister Araghchi visited China. During his meeting with Wang Yi, Wang clearly encouraged Iran and the U.S. to remain rational and restrained, return to the “Islamabad Memorandum of Understanding” as soon as possible, and rebuild the negotiation mechanism. This diplomatic strategy of “moving step by step” rather than “raising the blade,” provides a buffer for the stalemated situation.
On the eve of the United Nations General Assembly, the U.S. did not issue a visa for Palestinian President Mahmoud Abbas to travel to the United States, yet it allowed Iranian President Masoud Pezeshkian to enter. This seemingly contradictory move actually reveals Washington’s delicate balancing act between maintaining the authority of hegemony and seeking diplomatic off-ramps.
Looking ahead, U.S.-Iran relations will most likely continue to show a tug-of-war pattern of “fighting and talking together.” Historical turning points rarely happen overnight; they often move slowly forward through repeated testing. For observers, judging where things are headed can’t rely only on the sound of gunfire—it must also focus on three hard indicators: the ledger, oil prices, and votes. The process of oil prices rising from $70 to $100 and then falling again clearly reflects market expectations about changes in the intensity of future conflict. Although signs of easing are emerging, the Middle East’s defining feature—“peace exists between two wars”—has not changed. Regional powers such as Saudi Arabia have been severely damaged by the fighting, U.S. domestic political pressure continues to build, and Iran’s domestic economy is also in dire shape. Therefore, no side has the capacity to sustain high-intensity confrontation for the long term. In this context, cautious optimism is the more rational attitude.
We should recognize that peace is not the default setting of the world; it is a dynamic balance reached by all sides under calculations of their interests and survival pressures. In a global backdrop where instability is intensifying, staying clear-headed about potential risks and understanding the economic and political ledgers behind geopolitics is far more valuable than simply venting emotions. Ultimately, no matter how winding the negotiation process may be, returning to rationality and controlling the scale of conflict remains the common choice most aligned with each side’s own interests.
Follow me—my next post will be a quick read of the situation so you don’t miss anything.
The geopolitical pendulum of the Middle East swings violently again, with market sentiment flipping rapidly between panic and expectations. Recently, as the U.S.-Iran conflict entered a war-of-exhaustion phase, international oil prices briefly surged past the psychological barrier of $100 per barrel, triggering global inflation jitters. However, the latest diplomatic developments suggest the deadlock is showing signs of loosening. According to information provided by an Iranian source cited by China Media Group (CMG), Qatar and Pakistan—acting as mediators—have sent signals to Tehran that Washington is prepared to restart negotiations and reach an agreement, and that it is taking a serious approach to moving this process forward. The market quickly picked up on the news, and international oil prices promptly fell.
For a Middle East situation that has long been under extreme pressure, this is not only a diplomatic breather, but also a re-pricing of the geopolitical risk premium.
Looking back at the evolution of this round of conflict, the core issue has always revolved around the “Islamabad Memorandum of Understanding.” Previously, the U.S. showed a cold attitude toward the memorandum and launched repeated military strikes against Iran. In response, Iran blocked the Strait of Hormuz and carried out retaliatory actions against U.S. targets. Meanwhile, Yemen’s Houthi forces significantly escalated their offensives in the Red Sea and within Saudi territory; on September 19, even thick smoke appeared at the airport in Riyadh, and the security situation deteriorated rapidly.
This “multi-front warfare” scenario has sharply increased pressure on all sides. On September 19, Rezaei, Secretary of Iran’s Supreme National Security Council, confirmed in an interview with Al Jazeera that Iran is holding consultations with Pakistan and Qatar. Qatar has passed Iran’s “conditions” to the U.S., and Iran is currently waiting for a response from the Trump administration. These conditions include ending the war on all fronts, releasing frozen funds, and ending the maritime blockade. Notably, despite the tension, Iran has not announced withdrawing from the Non-Proliferation Treaty; Rezaei emphasized that the decision depends on Washington’s actions. This stance of “fighting and negotiating at the same time” reflects that both sides are still making room for a final political resolution.
From a deeper logic standpoint, what is bringing both sides back to the negotiating table is not simply goodwill, but an unbearable reality-cost. First comes the exhaustion of fiscal and military resources. The U.S. military disclosed to Congress that, as of September 3, military actions targeting Iran had already resulted in at least $45.1 billion in spending, roughly equivalent to more than 300 billion yuan RMB. This hefty bill does not yet include hidden costs such as allied losses, personnel casualties, and damage to credibility. Even more severe is the depletion of U.S. ammunition—especially air defense missiles—more than half of which were consumed during months of exchanges, and there have even been cases where some missiles failed to intercept targets because the U.S. was reluctant to use them.
Second is economic blowback. The surge in oil prices directly hits Americans’ day-to-day living standards, especially households that rely on gasoline-powered cars. In the U.S. political context, high oil prices are a major enemy of the ruling party. If the Republicans lose in the midterm elections, policy room for the latter half of the Trump administration will be significantly squeezed. Finally, there is the risk of the conflict spiraling endlessly. The intense confrontation between the Houthis and Saudi Arabia puts the U.S. in a dilemma of being pulled into a larger-scale regional war. As Saudi Arabia is a U.S. ally, its homeland security is threatened, forcing Washington to reassess the depth and breadth of its involvement.
Under the triple pressure of “can’t afford to fight, can’t afford to drag it on, can’t afford to lose,” negotiations become the only viable exit.
During this process, the role of third-party mediators is crucial. As traditional mediators, Pakistan and Qatar shuttle back and forth between the two sides, working to build a bridge for communication. In addition, China’s diplomatic moves also deserve attention. Three days ago, Iranian Foreign Minister Araghchi visited China. During his meeting with Wang Yi, Wang clearly encouraged Iran and the U.S. to remain rational and restrained, return to the “Islamabad Memorandum of Understanding” as soon as possible, and rebuild the negotiation mechanism. This diplomatic strategy of “moving step by step” rather than “raising the blade,” provides a buffer for the stalemated situation.
On the eve of the United Nations General Assembly, the U.S. did not issue a visa for Palestinian President Mahmoud Abbas to travel to the United States, yet it allowed Iranian President Masoud Pezeshkian to enter. This seemingly contradictory move actually reveals Washington’s delicate balancing act between maintaining the authority of hegemony and seeking diplomatic off-ramps.
Looking ahead, U.S.-Iran relations will most likely continue to show a tug-of-war pattern of “fighting and talking together.” Historical turning points rarely happen overnight; they often move slowly forward through repeated testing. For observers, judging where things are headed can’t rely only on the sound of gunfire—it must also focus on three hard indicators: the ledger, oil prices, and votes. The process of oil prices rising from $70 to $100 and then falling again clearly reflects market expectations about changes in the intensity of future conflict. Although signs of easing are emerging, the Middle East’s defining feature—“peace exists between two wars”—has not changed. Regional powers such as Saudi Arabia have been severely damaged by the fighting, U.S. domestic political pressure continues to build, and Iran’s domestic economy is also in dire shape. Therefore, no side has the capacity to sustain high-intensity confrontation for the long term. In this context, cautious optimism is the more rational attitude.
We should recognize that peace is not the default setting of the world; it is a dynamic balance reached by all sides under calculations of their interests and survival pressures. In a global backdrop where instability is intensifying, staying clear-headed about potential risks and understanding the economic and political ledgers behind geopolitics is far more valuable than simply venting emotions. Ultimately, no matter how winding the negotiation process may be, returning to rationality and controlling the scale of conflict remains the common choice most aligned with each side’s own interests.
Follow me—my next post will be a quick read of the situation so you don’t miss anything.
