Trump says Iran would receive ‘the hammer’ without progress

Reports say Khamenei granted government powers for U.S. talks

Donald Trump told voters in Iowa on Sunday that Iran would receive “the hammer” unless there was progress. During a campaign rally, he said: “The only reason why I’m not finished with Iran is I want to be nice. I want to try and save all those lives if I can … But at some point we’re going to have to give them the hammer.”

On Monday, reports said Iran’s supreme leader, Mojtaba Khamenei, had granted “powers” to his government in its talks with the United States seeking to end the Middle East war. Investors were cheered by the reports.

Iranian Foreign Minister Abbas Araghchi said, according to state media outlet IRNA, that consultations through mediators were intensive, that Iran had presented its conditions and proposals, and that everything depended on the political rationality of Washington.

Brent crude, the international benchmark, dropped by more than 6.5% to as low as $105.55 a barrel on Monday, the lowest since 16 October and the lowest level in over two weeks. Oil prices fell after Tehran revealed that contacts between Iran and the United States to end their eight-month war were continuing. The decline sent shares in airline companies higher and pushed down government borrowing costs.

The Strait of Hormuz shipping lane has been largely closed since the United States and Israel attacked Iran earlier this year, and it remained largely closed on Monday. Over the weekend, Qatari officials tried to negotiate the release of more than $6bn in Iranian assets so that Tehran might allow the strait to reopen.

Chris Beauchamp, chief market analyst at investing and trading platform IG, said: “The news is manna from heaven for stock markets, which have felt increasingly pressured by oil’s rise, but of course there is still a risk that Trump will try one last throw of the iron dice after the midterms.”

The decline in oil sparked hopes of a break in the inflationary pressures gripping the global economy. Government borrowing costs dropped, with the yield — or interest rate — on 10-year UK government bonds dropping 10 basis points, or 0.1 of a percentage point, to the lowest level since 22 September.

Shares in British Airways’ parent company, IAG, rose by 4.2% in London, while United Airlines jumped 7% in New York.