Don't be too credible that Iran and the United States will actually reach an agreement.
2026-09-23 19:12:12
We've been repeatedly led by the news regarding the Iran-US peace talks. At one point, everyone thought peace was just around the corner—a memorandum of understanding was signed, the 60-day negotiation period began, the Strait of Hormuz was about to reopen, sanctions were about to be eased, and oil prices were about to plummet. But what happened? Oil prices repeatedly fell and then rose, experiencing rollercoaster ride after rollercoaster. 
Who remembers the Islamabad Memorandum of Understanding from June 2026? This 14-point memorandum explicitly promised: an immediate and permanent end to all military operations, including in Lebanon; the complete lifting of the US naval blockade of Iranian ports within 30 days; permission for Iran to resume crude oil exports; discussions on unfreezing assets; the establishment of a reconstruction fund of at least $300 billion; and a final agreement within 60 days. Less than a few weeks after its signing, the memorandum became worthless, with subsequent conflicts recurring, the blockade resuming, and navigation in the Strait of Hormuz severely restricted again. What I see is that every time both sides are on the verge of collapse, they feign a desire for peace talks. This is not a genuine strategic shift, but rather a tactical "pause" and "signaling war." The US's logic is clear and realistic. The costs of severe blockades and prolonged war are already high: military deployments, allied coordination, and domestic inflation. Even more devastating is the impact on oil prices. The long-term restriction of the Strait of Hormuz will disrupt approximately one-fifth of global oil and a significant amount of liquefied natural gas transport. Brent crude oil repeatedly tested and even held above $100 in 2026—reaching around $109 in mid-September before briefly retreating due to news of talks. High oil prices directly impact voters' wallets, freight costs, and overall inflation expectations. With the midterm elections in November 2026 approaching, the Republican Party is virtually powerless to address this. Trump needs a "progress bar" to reassure the market and his party. During the UN General Assembly, he confidently stated, "This time it really will be signed," "Oil prices will drop ridiculously low," and "Oil prices will come down if I win the war." But at the same time, he also made harsh statements—either reach an agreement to rebuild Iran or "swiftly eliminate the Islamic Republic." This combination of hard and soft tactics gives the market hope to lower risk premiums while retaining the option of escalation to avoid domestic criticism of "weakness." From a game theory perspective, this is a typical "cheap signal": sending the signal "we are talking" is extremely low-cost but can immediately influence oil price expectations and voter sentiment. Genuine commitments—verifiable timelines for lifting sanctions, substantial restrictions on nuclear facilities, and long-term inspection mechanisms—are extremely costly and, once fulfilled, difficult to renege on. Currently, the US needs the former more. Iran, on the other hand, is equally calculating. War is costly, there's a naval blockade, export restrictions, economic pressure, and tension between hardliners and pragmatists within the country. The Revolutionary Guard says, "If peace is truly in the country's interest, why not?" The reality is they can negotiate under certain conditions: lifting the blockade, unfreezing assets, and ending hostilities on all fronts. But core interests (nuclear capability as a final deterrent, a network of regional proxies, and regime security) will not be easily conceded. When the pressure becomes unbearable, they signal "we can talk" through mediators like Qatar and Pakistan, buying time, easing the blockade, observing the other side's bottom line, and simultaneously demonstrating domestically that "we are not showing weakness, but are using strength to buy peace." History repeats itself: both sides need a window of opportunity that "appears to be negotiating"—the US uses it to lower oil price expectations and stabilize the election; Iran uses it to alleviate economic stagnation and solidify its internal narrative. When the core differences are truly touched upon (zero enrichment vs. retaining enrichment rights, inspection depth, missile programs, regional proxies), each side talks its own game and blames each other, bringing negotiations back to square one. This time, the situation is: severe blockade + midterm elections + a new round of "talks." This round of US blockade and military pressure is indeed heavier, with significant restrictions on navigation in the Strait of Hormuz, and the global oil market remaining in a state of "war premium" for a long time. Brent crude repeatedly surged and even rose above $100, only briefly falling back when "talk news" emerged. On September 22-23, 2026, Trump announced a "very good, productive three-hour meeting" during the UN General Assembly (later confirmed to be mostly through mediators, with some reports indicating direct contact), and oil prices immediately plummeted—Brent fell from above $100 to around $99. The market once again priced in "diplomatic progress." But the details remain painfully familiar: Trump said on the one hand that there was "great momentum to reach an agreement" and that it could be signed "soon after the midterm elections," while on the other hand threatening "destroy us if we don't talk." Iran, through the mediator, presented rigid conditions: immediate lifting of the maritime blockade, unfreezing of assets, and an end to hostilities on all fronts, while firmly stating that "there is no other way but to accept our conditions" and "we are prepared for a decisive war." Different versions of what was discussed have emerged again, with no substantial consensus reached on key issues such as nuclear inspections, asset usage, and the timetable for opening the Strait of Hormuz. This isn't a new script, just an old play with different actors and a different setting. The same scenario played out during the memorandum period: optimistic statements, falling oil prices, disintegration of details, and repeated conflicts. Now, with the midterm elections approaching, the Republicans need the narrative of "oil prices will fall"; Iran also needs breathing room. Thus, a new "talk" has begun. Let's leave it at that for now. If they want to put on a show, let's play along for a few more episodes. Perhaps Trump and Mujtaba are both aware of this. Their intention is to first make a show of force to gain short-term benefits, and then confront or delay when it comes to fundamental interests. A genuine agreement requires both sides to be willing to pay substantial costs and establish a credible verification and punishment mechanism. Current evidence—from the rapid cracks in the memorandum to open disagreements on the nuclear issue, and the repeated manipulation of oil prices by "peace expectations"—all point to the same conclusion: don't take it too seriously.
Who remembers the Islamabad Memorandum of Understanding from June 2026? This 14-point memorandum explicitly promised: an immediate and permanent end to all military operations, including in Lebanon; the complete lifting of the US naval blockade of Iranian ports within 30 days; permission for Iran to resume crude oil exports; discussions on unfreezing assets; the establishment of a reconstruction fund of at least $300 billion; and a final agreement within 60 days. Less than a few weeks after its signing, the memorandum became worthless, with subsequent conflicts recurring, the blockade resuming, and navigation in the Strait of Hormuz severely restricted again. What I see is that every time both sides are on the verge of collapse, they feign a desire for peace talks. This is not a genuine strategic shift, but rather a tactical "pause" and "signaling war." The US's logic is clear and realistic. The costs of severe blockades and prolonged war are already high: military deployments, allied coordination, and domestic inflation. Even more devastating is the impact on oil prices. The long-term restriction of the Strait of Hormuz will disrupt approximately one-fifth of global oil and a significant amount of liquefied natural gas transport. Brent crude oil repeatedly tested and even held above $100 in 2026—reaching around $109 in mid-September before briefly retreating due to news of talks. High oil prices directly impact voters' wallets, freight costs, and overall inflation expectations. With the midterm elections in November 2026 approaching, the Republican Party is virtually powerless to address this. Trump needs a "progress bar" to reassure the market and his party. During the UN General Assembly, he confidently stated, "This time it really will be signed," "Oil prices will drop ridiculously low," and "Oil prices will come down if I win the war." But at the same time, he also made harsh statements—either reach an agreement to rebuild Iran or "swiftly eliminate the Islamic Republic." This combination of hard and soft tactics gives the market hope to lower risk premiums while retaining the option of escalation to avoid domestic criticism of "weakness." From a game theory perspective, this is a typical "cheap signal": sending the signal "we are talking" is extremely low-cost but can immediately influence oil price expectations and voter sentiment. Genuine commitments—verifiable timelines for lifting sanctions, substantial restrictions on nuclear facilities, and long-term inspection mechanisms—are extremely costly and, once fulfilled, difficult to renege on. Currently, the US needs the former more. Iran, on the other hand, is equally calculating. War is costly, there's a naval blockade, export restrictions, economic pressure, and tension between hardliners and pragmatists within the country. The Revolutionary Guard says, "If peace is truly in the country's interest, why not?" The reality is they can negotiate under certain conditions: lifting the blockade, unfreezing assets, and ending hostilities on all fronts. But core interests (nuclear capability as a final deterrent, a network of regional proxies, and regime security) will not be easily conceded. When the pressure becomes unbearable, they signal "we can talk" through mediators like Qatar and Pakistan, buying time, easing the blockade, observing the other side's bottom line, and simultaneously demonstrating domestically that "we are not showing weakness, but are using strength to buy peace." History repeats itself: both sides need a window of opportunity that "appears to be negotiating"—the US uses it to lower oil price expectations and stabilize the election; Iran uses it to alleviate economic stagnation and solidify its internal narrative. When the core differences are truly touched upon (zero enrichment vs. retaining enrichment rights, inspection depth, missile programs, regional proxies), each side talks its own game and blames each other, bringing negotiations back to square one. This time, the situation is: severe blockade + midterm elections + a new round of "talks." This round of US blockade and military pressure is indeed heavier, with significant restrictions on navigation in the Strait of Hormuz, and the global oil market remaining in a state of "war premium" for a long time. Brent crude repeatedly surged and even rose above $100, only briefly falling back when "talk news" emerged. On September 22-23, 2026, Trump announced a "very good, productive three-hour meeting" during the UN General Assembly (later confirmed to be mostly through mediators, with some reports indicating direct contact), and oil prices immediately plummeted—Brent fell from above $100 to around $99. The market once again priced in "diplomatic progress." But the details remain painfully familiar: Trump said on the one hand that there was "great momentum to reach an agreement" and that it could be signed "soon after the midterm elections," while on the other hand threatening "destroy us if we don't talk." Iran, through the mediator, presented rigid conditions: immediate lifting of the maritime blockade, unfreezing of assets, and an end to hostilities on all fronts, while firmly stating that "there is no other way but to accept our conditions" and "we are prepared for a decisive war." Different versions of what was discussed have emerged again, with no substantial consensus reached on key issues such as nuclear inspections, asset usage, and the timetable for opening the Strait of Hormuz. This isn't a new script, just an old play with different actors and a different setting. The same scenario played out during the memorandum period: optimistic statements, falling oil prices, disintegration of details, and repeated conflicts. Now, with the midterm elections approaching, the Republicans need the narrative of "oil prices will fall"; Iran also needs breathing room. Thus, a new "talk" has begun. Let's leave it at that for now. If they want to put on a show, let's play along for a few more episodes. Perhaps Trump and Mujtaba are both aware of this. Their intention is to first make a show of force to gain short-term benefits, and then confront or delay when it comes to fundamental interests. A genuine agreement requires both sides to be willing to pay substantial costs and establish a credible verification and punishment mechanism. Current evidence—from the rapid cracks in the memorandum to open disagreements on the nuclear issue, and the repeated manipulation of oil prices by "peace expectations"—all point to the same conclusion: don't take it too seriously.
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