US President Donald Trump said on Monday the United States and Iran had held talks towards ending the three-week Middle East war, putting threatened US attacks on Iran’s power plants on hold.

In a social media post that immediately sent oil prices tumbling, Trump said Washington and Tehran had held “productive conversations” over the past two days towards “a complete and total resolution” of hostilities in the Middle East.

Iranian media outlets quoted the foreign ministry denying any such talks and suggesting Trump was attempting to bring down energy prices sent soaring by the war. State television’s latest news bulletin made no mention of the claim.

Trump said he had told the Pentagon to “postpone any and all military strikes against Iranian power plants and energy infrastructure for a five-day period, subject to the success of the ongoing meetings” based on talks to date.

He said the US-Iranian sides would keep talking “throughout the week.”

The announcement came ahead of a Monday night ultimatum for the Islamic republic to reopen the Strait of Hormuz shipping lane, or see Trump “obliterate” its power plants.

In response, Iran had threatened to deploy naval mines in the Gulf and target power plants across the region, ramping up its rhetoric after warnings the world faced an energy crisis of historic proportions if the US-Israeli war with Iran continues.

Regional strikes continue

Tehran has retaliated against US-Israeli attacks by throttling traffic through Hormuz, a conduit for a fifth of global crude, hitting energy sites and US embassies across the Gulf as well as targets in Israel.

Israel hit Tehran with fresh strikes on Monday, with the latest wave reported by the military minutes after Trump’s announcement.

The head of the International Energy Agency, Fatih Birol, warned overnight that in the event of a protracted war, daily oil losses put the world on track for a crisis worse than the combined impact of both 1970s oil shocks and Russia’s invasion of Ukraine.

Oil prices have been driven above $100 a barrel by the conflict and tumbled sharply after Trump’s announcement, while European stocks rebounded.

International benchmark Brent North Sea crude plunged more than 14% to $96.00 per barrel, while the main US oil contract West Texas Intermediate shed more than 14% to $84.37 per barrel.

The world’s second-largest economy, China, said earlier on Monday it was capping domestic fuel cost increases to mitigate the effect of surging oil prices.

International response

China’s foreign ministry warned before Trump’s post of an “uncontrollable situation” should the war expand further.

Key Iran ally Russia called for an “immediate cessation of hostilities” after Trump’s announcement.

In a call with Iran’s top diplomat Abbas Araghchi, Russia’s Sergei Lavrov called for “a political settlement that takes into account the legitimate interests of all parties involved, above all Iran,” the Russian foreign ministry said.

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Trump had offered varying timelines and objectives for the war, saying on Friday he was considering “winding down” the operation, only to later threaten Iran’s power plants, of which it has more than 90.

Israeli Prime Minister Benjamin Netanyahu, who has yet to comment on Trump’s announcement, has spoken of a long-term campaign against Iran’s government, a state sponsor of Hamas, which launched the 7 October 2023 attack triggering the Gaza war.

Lebanon campaign expands

In Lebanon, Israel has expanded its ground campaign against Iran-backed Hezbollah, warning of “weeks of fighting” there.

The Lebanon violence has killed more than 1 000 people and displaced more than a million, according to the health ministry.

On Monday, Israel’s military said it was working to intercept a new salvo of missiles from Iran, while confirming its own artillery fire had killed an Israeli civilian a day earlier near the Lebanese border.

In Iran, at least 3 230 people have died in the war, including 1 406 civilians, according to the US-based Human Rights Activists News Agency. AFP is unable to access the sites of strikes nor independently verify tolls in Iran.

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