After weeks of tension, President Trump has backed off from attacking Iran, saying a new round of talks would begin Monday, with Iranian officials aware that a major attack was being prepared, as it was visible to the naked eye.

A Deal “On the Perimeters”

Earlier Sunday, Trump posted on Truth Social that Iran, alongside a number of allies in the Middle East, had personally begged him to cancel planned military action, with him stating that a deal “is on the perimeters.”

Meanwhile, Iran’s semi-official Mehr news agency has dismissed this claim, with it suggesting that there was no evidence that Iranian officials had asked Trump to halt military action.

This isn’t the first time that Trump has claimed that a deal was close, only for fighting to resume shortly after. As such, while Monday’s talks will be interesting, there are reasons to believe that they will not lead to an immediate resolution to the standoff between Washington and Tehran.

When asked by reporters if there was a deadline for a deal, Trump did not give a specific date, instead saying that things would “happen,” and that the US would take action “when it’s necessary.” He also suggested that he did not want to cause any deaths, claiming that he was “very happy” to be able to “save lives.”

As for why he cancelled the attack, Trump credited a number of regional allies, including Saudi Arabia’s Crown Prince Mohammed bin Salman, alongside the UAE and Qatar, for persuading him to stand down over the weekend, with him suggesting that they felt a deal was possible, including one related to the Strait of Hormuz, with another possible on Iran’s nuclear program in the future.

Markets React to News

Markets have also reacted sharply to the news, with oil prices falling sharply in Asian trade on Monday, after spiking on Friday.

As of 08:00 AEDT, Brent crude had fallen over 4% to just under $84 a barrel, while US crude slid by a similar margin to just above $80, with fears over the strategic waterway understandable given that it carries “15-20% of global oil and LNG shipments.”

The Strait of Hormuz has been the flashpoint between Iran and the US since fighting began in late February, with any news regarding it sending shockwaves through markets.

Mixed Messages from Iran

While Trump has been bullish about the prospect of talks, Iran has been more cautious. Foreign Minister Abbas Araghchi has suggested that negotiations with Oman, who have acted as intermediaries, were close to a deal relating to the Strait of Hormuz.

Meanwhile, Iran’s acting defense minister has warned that any threats, including those he suggested were “psychological,” from a foreign power would be taken “very seriously.”

This has led to a mixed message about the situation from Iran, with optimism about negotiations being possible tempered with warnings that any threats would be responded to in kind.

What’s Next?

Much about Trump’s plans remain unclear, with him not specifically stating where the talks would be held, or who would participate in them.

He also did not directly answer a question about whether the attack that he cancelled would have targeted Iran’s energy infrastructure, with such an attack likely to be considered an attack under international law if it involved the targeting of civilian infrastructure.

By his own admission, the attack he cancelled would have been “something very big,” and potentially the largest military attack since the Second World War, with him suggesting that it would have “ended negotiations.”

What is clear is that markets have taken the news in stride, with regional allies pushing for de-escalation, with Monday’s talks being seen as an important step in determining whether the conflict will end, or if it will resume.