Trump signals Iran meeting willingness, S&P 500 futures up 1%

President Trump's openness to direct talks with Iran triggered an intraday reversal in U.S. equities and a 7% drop in crude oil.

President Donald Trump said Monday he was willing to meet with Iran, declaring "something good could happen," as a three-day halt in U.S.-Iran hostilities opened the door to renewed diplomacy and sent the S&P 500 into positive territory.

"Either it goes fast or not at all," Trump told Axios, warning he would give the diplomatic window limited time before returning to "very strong military action." The president said the U.S. was engaged in "very deep talks" with Iran, though Tehran's foreign ministry denied any direct negotiations, confirming only discussions with Oman on "mechanisms regarding maritime traffic" in the Strait of Hormuz.

Brent crude tumbled 6.8% to $85.49 a barrel, while West Texas Intermediate fell 7% to $83.06. S&P 500 futures rose 1% and European equities rallied, with the DAX climbing 1.6% and the FTSE 100 adding 0.5%. The moves reversed a two-week buildup in geopolitical risk premiums that had pushed oil above $90 and dragged global equities lower. "Oil's sharp retreat did more than knock a few dollars off the barrel. It loosened the geopolitical knot that had been tightening around equities, currencies, bonds and central banks for most of July," said Stephen Innes, managing partner at SPI Asset Management.

The Strait of Hormuz — through which about 21% of global oil trade passes — remains effectively closed, with Iran's Revolutionary Guard turning back six vessels Monday using warning shots. Talks between Iranian and Omani officials over the weekend were "constructive" and moving in a "positive direction," an Iranian official told CBS News, but Tehran insists it has no direct negotiations with the U.S. The last three nights have seen no new strikes by either side after 13 consecutive days of U.S. bombing.

Diplomatic Window Opens After 13 Days of Strikes

The pause followed a recommendation from top military advisers that the bombing campaign had "reached the limit of its effectiveness," according to sources cited by Reuters, with concerns over depleting stockpiles of Patriot anti-missile interceptors. U.S. Ambassador to the United Nations Mike Waltz said the halt was aimed at "giving diplomacy some space," while stressing that additional military assets were "moving into the region." More than 400 U.S. service members have been flown out of the Middle East for treatment since Operation Epic Fury began on Feb. 28, a U.S. official told CBS News, though most cases were not combat-related.

The diplomatic opening coincides with Israeli Prime Minister Benjamin Netanyahu's arrival in Washington for a Tuesday meeting with Trump at the White House, where Iran is expected to be the primary agenda item. Netanyahu said he would discuss how to "maintain our security and also expand the circle of peace." Israel joined the U.S. in launching military operations against Iran on Feb. 28 and has opposed any ceasefire that leaves Iran's nuclear program intact. The meeting comes as anti-government protests in Tel Aviv have drawn more than 200 demonstrators, with at least nine people arrested.

Oil Markets Price in Ceasefire Premium

Shipping through the Bab el-Mandeb Strait, the southern gateway to the Red Sea, fell to its lowest level in months Sunday after Iran's Houthi allies traded fire with Saudi Arabia, according to shipping intelligence firm Kpler. Only 11 commodity ships transited the passage, which had seen increased traffic as an alternative route with the Strait of Hormuz largely gridlocked. Saudi air defenses intercepted several drones launched from Iraq targeting petroleum facilities Monday, while Jordan's armed forces shot down two drones that breached its airspace from Iranian territory.

The last time a similar diplomatic opening emerged — the June 2026 memorandum of understanding between the U.S. and Iran — oil prices fell about 12% over two weeks before the ceasefire collapsed and hostilities resumed in early July. Markets are pricing a similar trajectory, though analysts cautioned against assuming a durable resolution. "There is more skepticism than optimism that the pause in fighting will continue," a senior Iranian source told Reuters. The Federal Reserve is scheduled to meet this week to discuss a possible interest rate decision, with elevated oil prices having complicated the inflation outlook.

This article is for informational purposes only and does not constitute investment advice.