Oil Falls Further As US Prepares Return Of Diplomats To Mideast Embassies
There continue to be clear signals that the White House is moving away from the potential for renewed military action and instead settling in for a long economic siege campaign targeting Iran, on a permanent basis.
The avoidance of more bombs away and with all the risks and uncertainty of a military 'solution' has seen oil prices drop. Energy prices are weakening also amid positive signals from Pakistan's army chief Field Marshal Asim Munir, who just left Tehran after carrying a fresh US-drafted framework. Crude oil prices (WTI) dropped 3% to just below $82.50 a barrel on Tuesday, extending the 2.4% decline recorded in the previous session.
Al-Arabiya is reporting that he presented an offer to lift sanctions under the MOU, so long as Iran reopened the Strait of Hormuz and halts all hostile actions against Gulf states.
Munir had spoken to Trump by phone before travelling to Tehran, which underscores the high-level nature of the reported offer. Other top Pakistani officials accompanied him:
Pakistan and Iran made "significant progress" in talks that focused on the US-Israeli war on Iran and a path to peace, Pakistan’s interior minister said on Tuesday, at the end of a visit to Tehran.
Pakistan's Interior Minister Mohsin Naqvi subsequently stated on X, "The Iranian President candidly shared his government’s perspective and we had a very constructive exchange on the issues involved."
While it's unclear what Tehran's response will be, the last days have not seen new Iranian attacks on shipping in the Hormuz Strait.
Still, Tehran is proclaiming that Washington's shift is a result of military defeat. On Tuesday Al Jazeera is citing IRGC spokesman Sardar Mohebi, who says the Trump administration's intensified economic campaign against Iran is proof that the US has failed on the battlefield.
He calls the move toward Operation Economic Outcast a "tacit admission" of America's military defeat in the region. As evidence for this the Iranians are pointing to US media admissions that pretty much all of the Pentagon's Gulf outposts have suffered damage or serious destruction, and US forces have pulled back. Even bases in Jordan have been hammered in what some analysts have called a successful campaign of 'debasification'.
But in another sign that Washington is moving away from a war-footing and instead opting for a long economic campaign, it is said to be readying the return of diplomats to the region. Another result of the fierce Iranian retaliation amid Operation Epic Fury had been the closure of US embassies and consulates across the region - which in some cases may have even been targeted.
"The State Department is preparing to send U.S. diplomats back to embassies in the Middle East that were evacuated before and during the war with Iran, suggesting that the Trump administration does not anticipate a return to all-out hostilities," the NY Times reports Tuesday.
"The return of foreign service officers and the scaling back of emergency measures taken at U.S. missions in the Middle East could begin this week, according to an internal State Department document obtained by The Times," the publication continues.
In Bessent's secondary sanctions rollout presser on Monday, he slipped up the below off-the-cuff moment when he called on a random journalist, who asked an excellent question:
Reporter: You described this as an economic D-Day, but D-Day wasn't a threat of an invasion and the US didn't give a timeline to Germany. So why not impose the sanctions today?
— Acyn (@Acyn) August 24, 2026
Bessent: Why would I want to blow up the global financial system? pic.twitter.com/WRt4onNuIM
Of course, nothing is yet certain and the situation remains very fluid, with the Iranians having previously demonstrated willingness to assert new leverage through attacks. According to details in the NY Times:
The restaffing is set to proceed even though talks between the United States and Iran have floundered, leaving the Trump administration to threaten new economic sanctions.
Embassies slated to restore higher levels of staffing include those in Israel, Lebanon, Saudi Arabia, Qatar, Jordan, Oman, Iraq and Kuwait, the document says.
The State Department issued a statement saying it "continuously reviews the security posture at our diplomatic missions around the world. Based on our latest assessment, we are adjusting our staffing posture at certain posts in the Middle East to ensure we can continue advancing U.S. foreign policy objectives while protecting the safety and security of our personnel."
But at this moment, embassies across the Gulf as well as Jordan remain shuttered, with most diplomatic personnel having been removed to other State Department posts.