War or Negotiation? The US and Iran Enter a "Crucial Week" as Oil Prices Remain Above the 100 Yuan Mark

The U.S.-Iran standoff has reached a new critical juncture. Amid stalled negotiations and ongoing military deployments, Trump has continued to send tough signals, while Iran has issued warnings of a "more devastating" counterattack and insists the diplomatic door remains open.

According to a report by Xinhua News Agency, on October 4, Iran's Foreign Minister Araghchi stated that although Iran is still willing to seek a "just and dignified" solution through diplomatic means, if the enemy resorts to military action again, Iran will retaliate with a response "more devastating" than ever before.

The Iranian Foreign Ministry spokesperson Baghaei noted that the latest proposal transmitted by the U.S. via Qatar "is basically consistent with the previous stance," mainly addressing nuclear issues, whereas Iran's current focus is the Strait of Hormuz. This dual-track logic has made it difficult for the market to judge the direction of the situation.

Last weekend, Trump told reporters outside the White House, "On the Iran issue, I'm going to decide. It’s either the easy way, or the hard way." He did not disclose a specific timeline, only adding, "You’ll see." Meanwhile, Axios reported that last Friday, Vice President Vance, Secretary of State Rubio, Defense Secretary Pete Hegseth, Special Envoy Steve Witkoff, CIA Director John Ratcliffe, and Joint Chiefs Chairman General Dan Caine convened at Camp David for a secret meeting; the Iran situation and the Yemeni Houthi issue were both on the agenda.

Bank of America pointed out that the current Brent crude price, around $103, falls exactly between the scenarios of "sporadic conflict" and "intensive engagement." This week, six strands—Trump’s decision, Iran’s response via Qatar, the trajectory of the Yemen situation, updates on tanker attacks, domestic pressures within Iran, and macro cross risks—will together determine which scenario the oil price aligns with. The boundary between war and negotiation may become clear this week.

On the diplomatic front, Trump’s statements escalated steadily last week.

Wallstreetcn mentions, according to CCTV, Trump said in a TIME magazine interview that if the U.S. and Iran can’t reach a satisfactory deal, military action may resume after the midterm elections; later the same day, en route to Oklahoma, he reiterated to the press:

They will either sign a very fair agreement or cease to exist.

Xinhua News Agency reported that on the 4th, Iranian Foreign Minister Araghchi stated that, during the recent UN General Assembly session in New York, the Iranian delegation presented a proposal aimed at resolving differences and ending the current hostile state with the U.S. If adopted by the U.S., the Strait of Hormuz would reopen within seven days.

Araghchi said the U.S. has failed both militarily and diplomatically in the past, and that new sanctions against Iran will also prove futile, urging the U.S. to choose a wise and rational path. He added that only by seeking solutions based on justice and fairness through diplomacy and negotiation can a real way out be found.

However, the U.S. military is still advancing a new round of deployments. According to The Wall Street Journal, the Theodore Roosevelt carrier strike group has departed San Diego, the Makin Island amphibious readiness group has set sail, and together the two groups carry over 7,000 sailors and roughly 2,000 Marines, expected to arrive in the Middle East around the end of October.

By then, the U.S. will have three carrier strike groups deployed near Iran. Bloomberg reports that this level of force concentration has not occurred since the start of the Iraq War in 2003.

Previously, Bloomberg reported that Iranian officials themselves believe the possibility of reaching an agreement before the November 3 midterms is very low, while "the risk of escalation increases sharply" after the elections. This means the diplomatic window from this week to next could be the last relatively controllable negotiation period before the midterms.

Addressing market confusion over "why oil remains above $100 now that Gulf exports are back to pre-war levels," Goldman Sachs commodities strategist Thomas Evans explained in a weekend report:

The tightness in supply has eased, but risk premiums remain. Futures and spreads are holding recent highs because the market is still pricing in a substantial risk premium.

Thomas Evans estimates the spot–futures spread to be around $20 to $25/barrel. He further emphasized:

The real risk is that, if an attack cuts Gulf shipments to less than 50% within days, current buffers will evaporate rapidly, and inventories and prices will spike sharply.

According to Bloomberg, Energy Aspects data shows global oil inventories have fallen by more than 400 million barrels since March, with the total around 4.3 billion barrels, a five-year low. Tanker charter rates from the Persian Gulf to China have surpassed $1.2 million a day. Since last Thursday, at least four tanker attacks have occurred in southern Oman’s waters. Should the UK Marine Trade Organisation (UKMTO) continue issuing warnings at this frequency, the current supply recovery based on "dark exports" will face a severe test.

Goldman Sachs co-head of global oil and products trading Jerome Dortmans said bluntly:

Iran has significant capability to disrupt exports through the Strait of Hormuz… The U.S. sending a third carrier group and 10,000 Marines to the area is absolutely a signal Iran cannot ignore.

"Decision Week" Looms? Easy or Hard Way—Market is Already Pricing In

Bank of America’s commodities team raised its Brent forecast for H2 2026 from $83 to $95, citing "sporadic conflict may persist through year-end." The current Brent price of about $103 is exactly between the scenarios of "sporadic conflict" and "intensive engagement"—in line with the assessments of those present at Camp David. Bank of America’s scenario matrix:

• Deal Reached, MOU Restored (Low Probability): Hormuz exports rebound above 10 million bbl/day, Brent averages $83 in H2 2026;
• Sporadic Conflict Maintained (Base Case): Intermittent exports around 5 million bbl/day, Brent averages $95 in H2 2026;
• Return to Intensive Fighting (Low Probability): Brent jumps to $120;
• War Engulfs Energy Infrastructure (Tail Risk): Brent averages $150 or even higher.

According to Bank of America, several clues this week will jointly determine which scenario Brent lands in:

First, Trump’s "decision." In the past five days, he has said "you’ll see" three times. Whether the Camp David meeting produced a substantive decision and whether there is official notice will be the focal point of the week.

Second, Iran’s response via Qatar. Baghaei said supplementary opinions must still be relayed from Qatar to Washington. The real disagreement is not over the actual terms, but the order of implementation—whether there is a breakthrough here will determine if talks enter a real substantive phase this week.

Third, the trajectory of the Yemen battlefield. Houthi forces are pushing along the last highway from Taiz to Aden. Whether Saudi Arabia can make progress along the Bab al-Mandab coast, and whether Riyadh or Khurais are hit, will directly affect expectations for the safety of the second energy corridor.

Fourth, developments with tanker attacks off southern Oman. At least four tankers have been attacked since last Thursday. If UKMTO continues issuing warnings at this rate, supply recovery based on dark exports will be materially affected.

Fifth, domestic pressure within Iran. The post of Iranian oil minister remains vacant, the rial has dropped to 2.7 million per dollar, and inflation approaches 90%. The degree of internal pressure in Tehran is also a critical variable in judging whether Iran’s negotiating bottom line will soften.

Sixth, macro cross risks. The Fed will release FOMC minutes on Wednesday, along with 10- and 30-year Treasury auctions; China returns to the market on Thursday after the Golden Week holiday, plus the background of October’s fuel export ban. Goldman Sachs noted that oil prices are currently "more correlated with rates than usual," so these macro factors cannot be ignored in crude’s trajectory.

Bloomberg concluded with the assessment of Chatham House researcher Aniseh Bassiri Tabrizi:

Both sides generally want a deal, but they’re drifting further apart.

With oil above $103, the market has already made its call—sporadic conflict will persist, but the boundary between war and negotiation is likely to become much clearer this week. As Trump himself said: "You’ll see."