President Donald Trump has yet to give any public indication of the true direction of the war in Iran, even as the conflict continued to escalate over the weekend.
Conflict Escalates, Ceasefire Buried
The exchange of attacks between the United States and Iran continued following an Iranian attack that killed two US soldiers in Jordan and wounded several others. Both sides appear to have largely abandoned a temporary peace agreement previously touted by Trump.
The US Central Command confirmed on Sunday that another service member had been killed the day before during an operation to control the explosion of an unexploded Iranian drone in northern Iraq. The US death toll now stands at 17 since the war began on February 28.
Trump Remains Silent, Focuses on World Cup
Trump only acknowledged the sacrifice of the fallen soldiers when speaking to reporters Sunday night after the World Cup final, insisting that the military was fighting to ensure that Iran does not acquire nuclear weapons. He also claimed that Iran is now “very badly damaged” and has lost almost all of its military capabilities.
Over the weekend, Trump kept a low profile, spending most of his time celebrating the World Cup final in New Jersey, without making any public appearances on Saturday. He did not mention Iran at all in a pre-match interview on the Fox network, instead focusing his social media posts on economic announcements and reform projects in Washington.
Energy Secretary Tries to Allay Concerns
Energy Secretary Chris Wright also appeared in a press conference Sunday morning to allay public concerns, assuring that the Strait of Hormuz has not been completely shut down. He stressed that the Trump administration’s focus remains on weakening Iran’s ability to threaten world trade and preventing Iran from acquiring a nuclear weapon.
Wright also opened the door to a diplomatic solution, saying that Trump is always looking for a peaceful solution, even if it requires cooperation from both sides. He said that overall shipping from the Gulf, whether through the Strait of Hormuz or alternative pipelines, is now about two-thirds of its pre-conflict level.
Analysts Worry About Continued Escalation Cycle
The Director of the Middle East Program at the Center for Strategic and International Studies, Mona Yacoubian, stressed that the world is currently in a cycle of escalation in the short term, with the trust that has been broken between the two sides making any efforts for a solution difficult.
The Director of Research for the Foreign Policy Program at the Brookings Institution, Michael O’Hanlon, also expressed concern that Trump is likely to repeat mistakes such as the previous Vietnam conflict, with Iran seen as risking Trump’s desire to reach a deal to strengthen the prospects of mid-term elections.
The Impact on the Market
The ongoing uncertainty about the true direction of the United States’ actions in Iran contributes to the prolonged risk-off sentiment in global financial markets. As long as Trump does not reveal a clear strategy, the market is expected to remain cautious in assessing the risk of further escalation that could affect the world’s energy supply.
For the Ringgit, any continued disruption to shipping flows in the Strait of Hormuz, which currently remains at two-thirds of normal levels, has the potential to add pressure on the country’s energy import costs in the near term.
Key Takeaways
US military casualties have reached 17 since the Iran war began on February 28, with no clear indication of the next direction from Trump.
Both sides appear to have abandoned a tentative peace deal following an escalation of hostilities over the weekend.
Energy Secretary Chris Wright has assured that the Strait of Hormuz has not been completely shut down, with shipping now at two-thirds of pre-conflict levels.
Analysts have voiced concerns that the world is now in a dangerous cycle of escalation as trust between the two sides has been shattered.
The ongoing uncertainty over the conflict has the potential to add to global risk-off sentiment and put pressure on energy costs against the Ringgit.
As long as Trump remains tight-lipped about his real plans, markets and the diplomatic world are expected to continue to watch closely to see whether the conflict will subside or escalate further in the coming weeks.
