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GEOPOLITICS  |  U.S./IRAN TALKS

Why Trump’s Iran Talks Keep Lurching Between Deal and War

Iran’s IRGC-heavy power structure is part of the problem, but Trump’s pressure-first bargaining style and an unfinished Hormuz settlement keep every truce provisional — and markets on edge.
 

Analysis  ·  July 27, 2026

President Donald Trump’s latest description of U.S./Iran diplomacy sounded familiar: the two countries are having “good talks,” an agreement is possible, but the U.S. will resume military operations if the discussions do not produce results. Iran immediately offered a different version, acknowledging that messages were passing through intermediaries but denying that Tehran had requested formal negotiations. 

That apparent contradiction is not simply confusion. It has become a defining feature of the conflict. Trump treats military pressure, public threats and negotiation as simultaneous tools rather than separate stages. Iran is doing much the same, using the Strait of Hormuz, regional armed groups and uncertainty over its own command structure to preserve leverage while avoiding an irreversible break in diplomacy.

The resulting process is less a conventional peace negotiation than a continuously repriced option: each side keeps open the right to return to force, and neither wants to be seen as the party that asked for relief.

At Least Six Major Shifts Since April

A conservative reading of the public record shows at least six sharp turns between diplomatic optimism and renewed coercion since early April. The exact number depends on whether statements made during the same negotiating round are counted separately.

A two-week ceasefire was announced April 7, followed by direct U.S./Iran talks April 12. Those talks ended without an agreement, and Trump announced a blockade of Iranian ports the next day. Trump then said April 21 that the ceasefire was being extended indefinitely, but the shipping arrangement through the Strait of Hormuz soon broke down.

In late May, U.S. officials portrayed an agreement as close. But Trump asked for several amendments to the text his own envoys had negotiated, particularly provisions dealing with Iran’s nuclear material. That initiated another multiday exchange of drafts. Iranian officials also said at the time that they had not approved the text.

On June 11, Trump moved within hours from threatening major new attacks to announcing what he called a “great settlement.” The Associated Press noted at the time that he had repeatedly said the parties were close to an agreement without one materializing.

Trump announced another interim agreement June 14, and a document was signed three days later. Yet almost immediately, he emphasized that it was not final and warned that bombing could resume if Iran did not “behave.” Oil prices rose nearly 1% as traders restored part of the war premium that had disappeared on the initial deal announcement.

Qatar then reported “positive progress” in indirect talks July 1. Within a week, attacks on vessels resumed, the U.S. restarted major strikes and Trump declared the ceasefire “over” — while simultaneously leaving open the possibility of continued negotiations.

The latest reversal has been even faster. On July 21, Trump said the U.S. had “no interest in meeting” until Iran was prepared to negotiate meaningfully. Six days later, he said the parties were engaged in good talks and that an agreement had a reasonable chance of emerging.

Figure 1. Each announced truce or “deal” since April has been followed within days or weeks by renewed coercion — and vice versa. Sources: Reuters, AP.

Trump has sometimes portrayed the breakdowns as a repeated Iranian tactic: negotiators appear to reach an understanding, Tehran asks for changes, and Washington hardens its position again. But the available reporting shows that the back-and-forth is not one-sided. Trump himself has reopened language his negotiators had accepted, while both countries have announced progress before their respective political and security institutions completed their reviews.

Table 1. Major turns in U.S.–Iran diplomacy since early April. A conservative count yields at least six sharp reversals. Sources: Reuters, AP, Qatari government statements.

Is Washington Talking to Iran’s Real Decision-Makers?

Partly — but describing Iran’s military as the country’s sole “true leader” is too simple.

Iran’s Foreign Ministry, president and diplomatic representatives are not necessarily unauthorized or irrelevant. They can negotiate language and transmit proposals. But they appear unable to guarantee that the wider Iranian security state will accept, interpret and implement those provisions in the same way.

The more important change is the growing dominance of the Islamic Revolutionary Guard Corps, or IRGC — which is distinct from Iran’s conventional military and functions as a military, intelligence, political and economic power center.

Following the death of Supreme Leader Ayatollah Ali Khamenei and the elevation of his son Mojtaba, Reuters reported that Iran no longer has the same single, authoritative referee capable of settling disputes among government institutions. Mojtaba remains formally at the top of the system, but people familiar with the leadership’s deliberations described him as largely legitimizing decisions formed by the generals and the Supreme National Security Council rather than independently commanding them.

Wartime authority has become concentrated in a hard-line circle involving the Supreme National Security Council, the supreme leader’s office and the IRGC. A Pakistani official involved in mediation said Iranian responses sometimes take two or three days because there is no single, straightforward decision-making command. Reuters also reported that the central obstacle was not necessarily open infighting, but the gap between what Washington was offering and what the Guards were willing to accept.

That distinction matters. The U.S. may be negotiating with an authorized diplomatic channel, but not with a counterpart capable of committing every part of the Iranian system on the spot. An Iranian diplomat may tentatively approve sanctions or nuclear language, while IRGC commanders retain control over missiles, maritime enforcement, regional armed groups and many of the assets that determine whether a ceasefire actually holds.

The relevant question, therefore, is not simply whether U.S. officials are sitting across from an Iranian general. It is whether the diplomatic mandate has been pre-cleared by the IRGC and Supreme National Security Council — and whether those institutions are explicitly responsible for implementing the agreement.

Why Both Sides Keep Returning to the Table

The up-and-down pattern persists because neither side is comfortable with the available deal, but neither side wants the cost of unlimited war.

Trump’s negotiating method relies heavily on coercive leverage. He escalates military or economic pressure, sets a deadline, signals that the opposing side has requested talks, and then offers a pause if concessions appear possible. If the draft remains short of his stated objectives, he can threaten to resume the campaign without acknowledging that the earlier announcement overstated the amount of progress.

Iran’s strategy is different in form but similar in purpose. Its security leadership wants to avoid a return to unrestricted war while retaining leverage over the Strait of Hormuz, nuclear policy and regional deterrence. Reuters reported that a strategic consensus had developed inside Iran around avoiding full-scale conflict while preserving bargaining power — particularly control over Hormuz.

That produces a recurring sequence:

Trump uses strikes to demonstrate that delay carries costs. Iran absorbs some damage but responds through shipping restrictions, missiles, drones or aligned groups. Mediators then create a diplomatic opening. Both governments describe enough progress to justify pausing some operations, but they publicly disagree about what was discussed and which side requested the talks. Once the text reaches the leadership or military-implementation stage, disputed language reappears and threats resume.

Indirect negotiations intensify the problem. Messages moving through Oman, Qatar, Pakistan and other mediators give both sides deniability, but they also add delays and create opportunities for different officials to describe the same exchange differently. Trump can call the process direct or “deep” talks, while Tehran can insist that it merely received messages rather than formally returning to negotiations.

Hormuz Is the Immediate Fault Line

The June document was an interim framework, not a comprehensive peace treaty. It established a period for negotiating larger questions, including Iran’s nuclear program, sanctions and maritime access. But the two countries continue to interpret its language on the Strait of Hormuz differently.

Washington says the arrangement requires free navigation. Iran argues that it retains the authority to supervise traffic, direct vessels through Iranian-approved channels and potentially collect transit fees. Iranian media reported Monday that six vessels had been turned around for attempting to cross without permission.

That disagreement is not a technical footnote. It concerns Iran’s most valuable remaining source of leverage.

A nuclear or sanctions understanding cannot stabilize the conflict if a tanker can trigger another military exchange. Nor can commercial shipping return to normal when shipowners, insurers and crews do not know whether U.S.-recommended routes will be recognized by Iranian forces.

Meanwhile, Israel and Iran-aligned groups remain capable of disrupting a bilateral U.S./Iran arrangement. Israel was not a party to the earlier emerging agreement, and current drone attacks attributed to Iran-backed groups underscore how quickly a nominal pause between Washington and Tehran can be tested by other actors.

The Latest Pause May Reflect Military Limits as Well as Diplomacy

Trump’s new emphasis on talks should not automatically be interpreted as evidence that the political differences have narrowed.

Reuters reported that U.S. commanders advised Trump that the bombing campaign was running out of suitable targets and that Joint Chiefs Chairman Gen. Dan Caine had raised concerns about air-munition inventories. Trump disputed suggestions that the U.S. faced a shortage, but acknowledged wanting more sophisticated weapons.

That suggests the diplomatic window may reflect several pressures at once: mediator activity, the declining marginal value of additional strikes, concern over military inventories, regional vulnerability and the economic consequences of keeping Hormuz restricted.

In other words, Trump may have returned to diplomacy not because he suddenly trusts Iran, but because another round of bombing may deliver less strategic value at a growing military and economic cost. Iran likewise may be talking not because it has accepted U.S. demands, but because a pause allows it to preserve forces and retain control of the strait as a bargaining chip.

Markets Are Trading the Probability of Access, Not Trump’s Adjectives

Oil has been the most direct measure of whether investors believe the conflict is escalating or easing. Following the U.S. bombing pause, West Texas Intermediate fell 7.5% to $82.56 per barrel and Brent declined 8.1% to $88.90. The benchmark 10-year Treasury yield fell 3.23 basis points to 4.647%, while the dollar slipped slightly against the yen.

Table 2. Market reaction to the U.S. bombing pause. Markets are pricing the probability of Hormuz access, not the tone of the day’s statements. Sources: futures settlements, CME FedWatch (July 27), Treasury market data.

The market response reflects several connected channels. A higher probability of open shipping through Hormuz reduces the immediate oil-supply premium. Lower energy prices reduce near-term inflation concerns, which can lower expectations for Federal Reserve rate increases and pull Treasury yields down. In the latest session, CME FedWatch data placed a 39% probability on a Fed increase this week and an 82% probability on a move by September, illustrating how strongly energy prices have affected the interest-rate debate.

The dollar’s reaction is less predictable. It can strengthen during escalation because of safe-haven demand and higher U.S. yields. But it can weaken if the conflict is perceived as a U.S.-specific fiscal or geopolitical risk, or when falling oil prices reduce expectations for Fed tightening. Bonds also have competing drivers: inflation can push yields higher, while severe risk aversion can generate a flight into Treasuries and push yields lower.

The core point is that markets are not merely reacting to whether Trump sounds positive or negative. They are continuously updating the probability that Hormuz will reopen, that the reopening will last, that the conflict will avoid oil infrastructure and that the Fed will face a prolonged energy-driven inflation shock.

Bottom Line

Iran’s increasingly militarized power structure is an important part of the negotiating instability. U.S. officials are communicating through diplomats and intermediaries who may be authorized to discuss terms but who cannot independently bind the IRGC, the Supreme National Security Council and every operational command involved in the conflict.

But that is only part of the explanation. Trump’s own method magnifies the swings. He frequently presents provisional movement as an impending breakthrough, reserves the right to reopen language, and uses renewed military threats to seek additional concessions. Iran responds with delays, denials, reinterpretations and pressure at sea.

A durable agreement will require more than another announcement that talks are going well. It would need unambiguous navigation rules for Hormuz, a military implementation and deconfliction channel, a verified sequence for nuclear and sanctions commitments, and explicit ownership by the Iranian institutions that control the weapons and maritime forces.

Table 3. What a durable agreement would require — and where each element stands as of July 27. Source: analysis of public reporting.

Until those elements appear, every optimistic Trump statement should be treated as a temporary reduction in the war premium — not confirmation that the war has ended.