The U.S. issued a warning, talks with Iran collapsed, the Houthis continue fighting, and Vance is set to resume negotiations—oil prices are 'numb'.

Israel is also drawing market attention. According to reports, Israel has drawn up a new round of strike plans and target lists, and Prime Minister Netanyahu continues pushing for the resumption of military operations. Iran: Rejects the draft, yet retains diplomatic language The diplomatic track has also suffered clear setbacks. A new agreement draft delivered to Iran by Qatari mediators was originally seen as a potential window for ending hostilities. However, senior Iranian officials stated that Iran cannot accept the draft, with the key disagreement persisting over nuclear issues. Iranian Foreign Minister Araghchi warned that any Israeli military adventurism in the Persian Gulf region would carry destructive consequences posing a serious threat to international markets. This statement directly targets the most sensitive variable for energy markets: Gulf energy infrastructure and shipping lanes. Yet Iran has not fully closed the diplomatic door. Shortly afterward, Araghchi stated that Iran continues to afford diplomacy a chance for success. This remark prompted crude oil to retreat from intraday highs, reflecting the market’s rapid recalibration of probabilities between military escalation and the resumption of negotiations. Vance’s letter: A parallel negotiation framework emerges While the U.S. signals military readiness and Iran rejects the current ceasefire proposal, new contact attempts have nonetheless surfaced between Washington and Tehran. According to a Xinhua News Agency report from Washington on October 28, citing The Wall Street Journal, U.S. Vice President Vance has sent a letter to Rear Admiral Ali Akbar Ahmadian, Secretary of Iran’s Supreme National Security Council (SNSC), seeking to restart negotiations. Citing informed sources, the report states that the letter was dispatched at Trump’s instruction—and that Trump himself was aware of this outreach. Vance’s letter and subsequent discussions between U.S. and Iranian officials did not address specific details of a peace plan; rather, they focused on exploring a possible negotiation framework. The report further notes that Vance’s initiative aims to determine whether sufficient common ground exists between the two sides to persuade Trump not to issue an order authorizing a strike against Iran in the coming weeks. Rear Admiral Ahmadian, who long served as commander of the Islamic Revolutionary Guard Corps (IRGC), is widely regarded as a representative of Iran’s ‘hardline’ faction. Some U.S. officials believe engaging Iran’s ‘hardliners’ may yield better diplomatic outcomes. Houthi pressure intensifies; risk to Saudi energy infrastructure repriced Beyond U.S.-Iran tensions, Houthi actions have further elevated geopolitical risk premiums. The Houthis claimed to have struck Ras Tanura refinery in Saudi Arabia’s Eastern Province using ballistic missiles. The refinery processes 550,000 barrels per day and sits within one of Saudi Arabia’s primary crude export hubs. The Saudi-led military coalition stated its air defense systems intercepted and destroyed three ballistic missiles aimed at the Eastern Province, as well as four drones targeting southern Saudi regions. Saudi civil defense authorities also reported damage caused by another intercepted Houthi attack. For crude oil traders, what matters most is not whether attacks hit their targets—but whether energy infrastructure, export hubs, and shipping lanes now face heightened risk. Iran has previously warned—both publicly and privately—that should it suffer renewed attacks, it will launch fierce retaliatory strikes against economic and civilian targets across the Gulf region. Oil prices: 'War premium' and fundamentals converge Oil’s reaction on Wednesday shows markets are pricing in two simultaneous dynamics: escalating Middle East conflict risks, and underlying support from physical supply and inventory conditions. Brent crude futures surged as much as 2.9%.

How should we interpret Trump’s directive to Vance to write to Iran’s hardline representative in an attempt to restart negotiations? What signal does this move send?

Trump told reporters late on the 28th that he approved Vance’s outreach request. Trump said: 'They [the Iranians] need medical supplies and various other forms of assistance. He [Vance] asked me what I thought. I said, “If you want to do it, that’s fine.”' Ahmadian is one of Iran’s most influential hardliners today. He was appointed Secretary of Iran’s Supreme National Security Council in August and previously served as the longest-tenured commander of the Islamic Revolutionary Guard Corps (IRGC). Some U.S. officials say dialogue with Iranian hardliners may yield better diplomatic results. Since the U.S. and Israel killed top Iranian regime leaders early in the war, Iran’s hardliners have accumulated substantial power in Tehran. On October 25, Ahmadian held a rare meeting in Tehran with senior security officials from Saudi Arabia, Pakistan, and Turkey—all seeking de-escalation. Previously, such visits were typically conducted by diplomats rather than security officials. Ahmadian’s status as a key interlocutor could marginalize other Iranian figures—including Foreign Minister Araghchi and Parliament Speaker Ghalibaf. U.S.-Iran negotiations have thus far failed to break the diplomatic deadlock. The U.S. insists Iran make concessions first on nuclear issues, while Iran demands immediate economic relief. An informed source said Vance’s letter and subsequent discussions between U.S. and Iranian officials did not involve specifics of a peace proposal but instead focused on a possible negotiation framework. Last week, Ahmadian stated Iran would not negotiate with Washington until its core demands were met. Trump, meanwhile, said last week that his administration was not speaking with Iranians—and hinted an imminent strike. He said: 'We’re not negotiating with them. We’ll get something—somehow—and it’s going to happen very soon.'

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Iran Receives Letter from Vance, Though No Word on Likely Reply

Iran Receives Letter from Vance, Though No Word on Likely Reply

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