Oil bulls were thwarted again after President Trump correctly observed that there is a good chance something will happen. After years of trading futures, I know that predicting “something will happen” is almost always a safe call. This time he was referring to an Iran deal—one of many—and the market is acting as though this one might actually hold.
Of course, the President also said, “We will take Pickaxe Mountain out if no deal.” He noted that the confines of a deal with Iran are there, but “we cannot have Iran break deals anymore.” Trump stated that Iran does not control the Strait of Hormuz—the United States does—and that Iran needs to make any arrangement formal. He added that Iran has essentially agreed not to have a nuclear weapon, that he is not looking to take out their bridges and power plants, and that the U.S. is in a very strong position. “This is a good time for Iran to make a deal,” he said. On Pickaxe Mountain specifically, Trump said he knows exactly what is going on there and it is “not a big problem.” He also noted that Israeli Prime Minister Benjamin Netanyahu wants to stay involved with Iran.
Oil prices declined on Tuesday as the U.S. and Iran continued a mutual pause in strikes. Trump told Axios he paused military action to create space for negotiations, declaring, “We are in very deep talks with Iran. If they don’t work out, we will go back to very strong military action.” He later reinforced the message, noting Iran had requested a meeting through surrogates, that “there’s a chance we can make a deal,” and that there is “plenty of time.”
MarketWatch reported that Iran’s foreign ministry pushed back publicly, with spokesman Esmaeil Baghaei insisting Tehran is not currently engaged in peace talks and will “never allow the United States to determine the timing of war and peace.” Still, the market is focusing on practical moves. Bloomberg reported that negotiating teams from Iran and Oman are working on a deal to resume shipping through the Strait of Hormuz. Separate conversations involving Iranian Foreign Minister Seyyed Abbas Araqchi, Saudi Arabia’s Faisal bin Farhan, and Oman’s Badr Al-Busaidi also took place. Success on the shipping front could reopen a path to broader talks aimed at ending the five-month conflict.
Reuters is reporting this morning that Oman has presented Iran with a Gulf-backed plan to manage the Strait of Hormuz, including a system of voluntary fees for ships transiting the waterway. According to a Gulf source and a Western diplomat who spoke to Reuters, the proposal is designed to end the disruption to oil and trade flows caused by the recent U.S.-Israeli conflict with Iran. Under the plan, Iran would not have sole control of the strait. Instead, it would work with Oman—which controls the opposite shore—and fees would be voluntary, similar to the system already used in Asia’s Strait of Malacca, where Indonesia, Malaysia, and Singapore request voluntary contributions to fund navigation, environmental protection, and search-and-rescue operations. One Western diplomat compared it to the voluntary carbon offset option travelers can choose when buying airline tickets.
Iran has previously said it wants to jointly manage the strait with Oman and charge service fees. Washington, however, wants a full return to the pre-war status quo of free passage with no payments and has warned that mandatory fees would be illegal. As of Monday evening, Iran had not formally responded to the Omani proposal. Omani officials met with Iranian counterparts in Tehran over the weekend, and Iran’s Foreign Minister Abbas Araqchi discussed the issue Monday with his Omani and Saudi counterparts, stressing the need for regional cooperation.
Markets will be watching closely. Any credible path toward de-escalation and freer flows through Hormuz would ease one of the biggest risk premiums hanging over crude right now.
Trump called off his latest campaign of air strikes after receiving advice from military commanders that the strategy had run its course. The 13 nights of renewed U.S. bombing killed scores in Iran and destroyed bridges and tunnels across the south as well as military targets. Iran had responded with attacks on U.S. bases in neighboring countries that killed four service members, and strikes on civil infrastructure in Gulf states that it said were in response to U.S. strikes on civilian targets.
Iran has said it would hold fire as long as Washington does. But drone attacks were reported in Jordan, Saudi Arabia, and northern Iran on Monday, and Jordan reported another drone being downed on Tuesday.
Speaking on Monday, Trump expressed optimism for a deal to end the five-month conflict while warning that U.S. strikes would resume if negotiations failed to deliver: “I think there’s a good chance that something could happen, and if it does, good, if it doesn’t, we go back to doing what we were doing two days ago.”
Iran says it has not sought any new negotiations with the United States, which it accuses of violating the agreement reached last month on a framework for talks to end the war. The U.S. president is scheduled to meet Israeli Prime Minister Benjamin Netanyahu in Washington on Tuesday. Although Israel was involved in the initial bombing campaign, it has not been part of subsequent peace talks, and recent relations between the two leaders have been strained. Trump has had to rein in the Israeli leader from attacking targets in Lebanon to try to weaken Iran-backed Hezbollah militants, complicating peace talks with Tehran.
The end of the U.S. bombing campaign over the weekend sent oil prices tumbling by around 8% on Monday, and the fall continued on Tuesday. were down more than 2.5% at around $86 a barrel by mid-morning.
Washington and Tehran reached an agreement in June on a framework for talks meant to take place by the end of August to resolve major issues such as Iran’s nuclear program. But they have disputed the meaning of the memorandum’s language about the strait, with Washington insisting it requires Tehran to allow free travel, while Iran says it grants it the authority to supervise transit.
The oil and gas industry entered 2026 bracing for a difficult year. What it got instead was a price surge, an unexpected cash windfall, and a set of strategic pressures that have only grown more urgent, according to Wood Mackenzie. That reality is still very much in play even as de-escalation hopes cool prices for the moment.
Elsewhere, the Israeli army is advancing into Syrian territory from the western outskirts of Daraa, according to Syrian sources cited by Fars News. Pakistan’s Interior Minister made an unannounced trip to Doha for security talks. Russia says its fuel crisis is easing as some refineries restart operations. TotalEnergies will appeal a French court order requiring it to adapt its business to climate goals. And a leaked UK grid report is warning that the net-zero push risks higher electricity bills and greater blackout vulnerability.
For now, the market is pricing a temporary calm. The so-called TACO trade is working, shipping talks are active, and the President keeps repeating that something could happen. In energy markets, that combination has a way of keeping both bulls and bears honest.
continued their slide Tuesday, with the front-month contract trading near $2.72–$2.73 per MMBtu — the lowest levels in roughly 11 weeks. The market is feeling the weight of two powerful forces: record U.S. production and a cooling of the intense summer heat that had been propping up power-burn demand.
U.S. Lower 48 dry gas output has climbed to an average of about 110.6 billion cubic feet per day so far in July, matching the previous monthly record set in December 2025. Daily production recently pushed even higher, hitting all-time highs above 112 bcfd. Strong output from Permian, Haynesville, and Eagle Ford continues to flood the system with supply.
At the same time, the hottest stretch of summer is starting to ease in key demand regions. Milder temperatures are reducing the need for air-conditioning load at gas-fired power plants, which typically account for a large share of summer consumption. Storage levels remain comfortable — inventories are running roughly 6% above the five-year average — giving the market little reason to bid prices higher.
LNG feedgas flows have also softened somewhat due to maintenance at facilities like Freeport, adding another layer of near-term softness. While demand is expected to pick up modestly in the days ahead if temperatures rebound, the overarching story remains one of abundant supply meeting more moderate weather.
For now, the bears have the upper hand. Record production and a less intense cooling season are keeping a firm lid on prices. Traders will be watching the next storage report and the evolving weather models closely — any surprise return of prolonged heat could still spark a bounce. Until then, the path of least resistance remains lower.
