Washington, United States - President Donald Trump on Monday hailed "very good" talks with an unidentified Iranian official after abruptly shelving plans for fresh attacks, even as Washington's ally Israel vowed to keep up strikes on the Islamic republic.
The surprise disclosure -- denied by Tehran, which accused Trump of manipulating energy markets -- came ahead of a Monday night deadline imposed by Trump for Iran to reopen the Strait of Hormuz shipping lane or see the US "obliterate" its power plants.
Oil prices fell and stock markets jumped as observers scrambled to interpret Trump's statements despite the Iranian denial.
Axios, citing an unnamed Israeli official, identified Trump's interlocutor as Mohammad Bagher Ghalibaf, Iran's speaker of parliament and one of its most prominent non-clerical figures.
The outlet and newswire Reuters reported US negotiators Steve Witkoff and Jared Kushner may meet an Iranian delegation for talks in Pakistan as soon as this week, with Vice President JD Vance possibly joining.
White House spokeswoman Karoline Leavitt did not deny the reports, saying "speculation about meetings should not be deemed as final until they are formally announced by the White House."
Pakistan's Prime Minister Shehbaz Sharif on Monday said he spoke with Iran's President Masoud Pezeshkian, promising Islamabad's help bringing peace to the region.
But Ghalibaf said on X that "no negotiations" were underway, insisting Trump was seeking "to manipulate the financial and oil markets."
Iranian foreign ministry spokesman Esmaeil Baqaei said messages were received from "some friendly countries indicating a US request for negotiations aimed at ending the war", but denied any such talks had taken place, Iran's official IRNA agency reported.
Israeli Prime Minister Benjamin Netanyahu said he had spoken to Trump and acknowledged the United States thought a deal was possible, but vowed to continue striking Iran and Lebanon to protect Israel.
"Trump believes there is a chance to leverage the tremendous achievements of the IDF and the US military... in an agreement," he said.
"At the same time, we continue to strike both in Iran and in Lebanon."
- 'Trump blinked' -
On a day of whiplash developments, Iran's neighbors breathed a sigh of relief after Trump stepped back from his threat to target Iranian power infrastructure.
Tehran had vowed to deploy naval mines and target power and water infrastructure across the region in retaliation, threatening to escalate an energy crisis of already historic proportions.
"Trump blinked first -- out of a clear understanding that striking Iran's energy infrastructure would trigger a direct and significant retaliation," Danny Citrinowicz, a security analyst and former Israeli intelligence Iran expert, wrote on X.
Trump said his administration was holding talks with an unidentified "top person," but not the country's supreme leader, Mojtaba Khamenei, who is believed to be injured.
He described the individual as "very reasonable," while warning if talks failed in the next five days, "we'll just keep bombing our little hearts out."
Thousands of US Marines are headed to the Middle East, reinforcing America's presence amid weekend speculation Trump was mulling ground operations either to seize Iranian oil assets or to forcibly reopen the Strait of Hormuz.
- 'Major threat' to economy -
Since the war erupted, Tehran has retaliated against US-Israeli attacks by throttling traffic through the Strait, a conduit for one-fifth of global crude, and by hitting Gulf energy sites and US embassies as well as targets in Israel.
International Energy Agency chief Fatih Birol warned if the war is protracted, daily oil losses would pave the way 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, but they tumbled sharply after Trump's announcements, while European stocks rebounded. Wall Street also closed up.
International benchmark Brent crude plunged some 10 percent to around $100 per barrel.
Trump said there were already "major points of agreement" with the Iranian negotiators.
US conditions included Iran abandoning any nuclear ambitions and giving up its enriched uranium stockpiles, he said.
- Lebanon ground campaign -
Trump has offered shifting timelines and objectives for the war, saying Friday he was considering "winding down" the operation -- only to later threaten Iran's power plants, of which it has more than 90.
Netanyahu has spoken of a long-term campaign against Iran's government, a sponsor of Hamas, which launched the October 7, 2023 attack that triggered the Gaza war.
In Lebanon, Israel has expanded its ground campaign against Iran-backed Hezbollah, warning of "weeks of fighting," striking southern Beirut again Monday and claiming to capture two Hezbollah fighters.
Israel reported a new wave of missiles fired from Iran early Tuesday.
Israel's attacks in Lebanon have killed more than 1,000 people and displaced more than a million, Lebanon's health ministry said.
The war has killed at least 3,230 Iranians, including 1,406 civilians, according to the US-based Human Rights Activists News Agency. AFP cannot access strike sites nor independently verify tolls in Iran.
