Crude prices tumble after Trump pauses planned Iran strike, offering possible relief for inflation, gas prices and interest-rate pressure across the U.S. economy.

WASHINGTON — President Donald Trump said Monday evening that he postponed a planned U.S. military strike on Iran after Gulf leaders personally urged him to allow additional time for negotiations, triggering an immediate selloff in oil prices and injecting the first major wave of optimism into global markets since the U.S.-Iran conflict erupted earlier this year.

“There seems to be a very good chance that they can work something out. If we can do that without bombing the hell out of them, I would be very happy,” Trump told reporters during a White House event Monday night, confirming he halted a military operation that had been scheduled for Tuesday.

Earlier in the day, Trump disclosed the decision in a Truth Social post, writing that he had instructed the U.S. military that “we will NOT be doing the scheduled attack of Iran tomorrow,” while simultaneously warning the Pentagon to remain ready “to go forward with a full, large scale assault of Iran, on a moment’s notice” if negotiations collapse.

The market reaction was immediate.

U.S. West Texas Intermediate crude futures dropped more than 2% in early Asian trading Tuesday to roughly $102 a barrel after surging 3.1% during Monday’s session. International benchmark Brent crude fell toward $107 after briefly trading above $112. Despite the decline, oil prices still remain more than 50% higher than where they stood before the U.S.-Israeli conflict with Iran escalated earlier this year.

For American consumers already squeezed by elevated inflation, the move matters enormously.

AAA data shows average U.S. gasoline prices hovering around $4 per gallon nationally, up sharply since the conflict intensified. Airlines, trucking firms, retailers and manufacturers have all warned that prolonged energy disruptions are beginning to flow directly into consumer pricing. Companies including Walmart Inc. and Whirlpool Corp. previously warned investors that sustained transportation and fuel costs could force additional price increases across household goods.

Energy inflation has also become one of the Federal Reserve’s biggest concerns.

April’s Consumer Price Index accelerated to 3.8%, with energy costs responsible for a significant share of the monthly increase. Wholesale inflation has also climbed sharply, raising fears inside financial markets that prolonged conflict in the Persian Gulf could keep interest rates elevated far longer than investors previously expected.

Trump said the postponement followed direct requests from leaders in Saudi Arabia, Qatar and the United Arab Emirates, who urged the administration to allow several more days for diplomatic talks to continue.

“They think they are getting very close to making a deal,” Trump said. “Hopefully maybe forever, but possibly for a little while.”

Iran signaled publicly Monday that negotiations remain active.

Iranian Foreign Ministry spokesman Esmaeil Baghaei confirmed Tehran submitted a revised proposal to Washington through Pakistani intermediaries, though Iranian officials declined to publicly release details. Reuters reported that the latest proposal closely resembles earlier Iranian offers that Trump had previously criticized as inadequate.

At the center of the global economic concern remains the Strait of Hormuz, the narrow waterway through which roughly one-fifth of the world’s oil supply normally flows. Shipping traffic through the region remains heavily disrupted, while hundreds of oil tankers remain stranded or delayed throughout the Persian Gulf amid continued military tensions and naval restrictions.

Saudi Aramco Chief Executive Amin Nasser warned earlier this month that more than 600 tankers remain trapped inside Gulf shipping lanes, with another 240 vessels waiting outside the strait. He cautioned that even if a diplomatic breakthrough emerges soon, normalization of global oil flows could still take many months.

The military situation also remains fragile despite the diplomatic pause.

The April ceasefire between Washington and Tehran technically remains in place, but drone and missile strikes targeting regional energy infrastructure have continued intermittently. Trump himself acknowledged last week that the ceasefire was effectively on “life support.”

Retired Admiral James Stavridis, former NATO Supreme Allied Commander Europe, warned during a CNBC appearance that the administration now faces limited options if negotiations fail: expand military operations, attempt to forcibly reopen the Strait of Hormuz, or step back entirely and risk broader regional instability.

“None of them are good,” Stavridis said.

Financial markets are now laser-focused on whether negotiations can produce a breakthrough quickly enough to stabilize oil prices before deeper economic damage spreads globally.

The Federal Reserve’s next policy meeting on June 16-17 has become especially important. Newly confirmed Fed Chairman Kevin Warsh enters the meeting facing rising bond yields, elevated energy inflation and increasing investor concern that interest rates may need to remain higher for longer.

A diplomatic resolution with Iran could ease pressure on oil markets, inflation readings and borrowing costs almost immediately.

A collapse in talks could do the opposite.

For now, traders, policymakers and consumers alike are watching the Persian Gulf more closely than Washington economic reports.

Because for millions of Americans staring at higher grocery bills, rising credit-card balances and expensive gas station receipts, the next few days overseas may directly determine how much financial pressure they face at home this summer.

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