Donald Trump has threatened to seize Iran’s Kharg oil terminal, but later said the operation would be off the table if a new agreement with Tehran is signed. The US president said earlier in the day that Washington would take the island “in the not too distant future”, before adding that the seizure would not happen “if we sign this agreement”.
Oil prices plunged to two-month lows on hopes of a deal and the reopening of the Strait of Hormuz. US West Texas Intermediate crude fell 1.9% to $86.08 a barrel, while Brent dropped 1.5% to $89.08 a barrel. Asian stocks also rallied on the news.
Iran’s foreign ministry later said Tehran had not made a final decision on an agreement, state media reported, and that it would not compromise on its “red lines”. The US had repeatedly changed its positions during the talks, a spokesperson said. Israel said it was not a party to the emerging memorandum of understanding between the US and Iran.
Kharg Island is home to a terminal through which Iran exports most of its oil, making it a critical asset for the Islamic republic. An assault on the island would severely curb Iran’s oil exports and could provoke heavier retaliatory attacks on Gulf Arab infrastructure, further driving up oil prices.
The new agreement reportedly includes a timeline for demining the Strait of Hormuz, during which the US naval blockade would continue, and discusses mechanisms for further nuclear talks and the release of frozen Iranian assets. Trump said the agreement’s “final points” had been “approved by all parties involved”, naming several countries including Israel, Saudi Arabia, and others.
