Monday’s near 4% drop in crude priced in a diplomatic opening that the subsequent news flow does little to support. That leaves room for some of the decline to retrace if the standoff persists. The terms on the table show how large the stakes are for supply: Iran’s plan links reopening the Strait of Hormuz and a US waiver on Iranian oil sales to an end of the US blockade of its ports, so a deal would release a significant flow of barrels. That makes the market asymmetric. Genuine progress could push prices sharply lower, but stalled talks, reported US strikes and advice in Washington to keep up economic pressure argue for a geopolitical risk premium staying in place. Any confirmation of US military action, or a firm Iranian response, is the next catalyst for crude.--- Oil sold off on hopes of an Iran deal, but stalled talks, a reported US strike and Washington’s preference for sustained pressure suggest that optimism was premature.Summary:Days of Iranian talks with Qatari mediators ended on Monday with altered proposals but no breakthrough; Tehran said contacts with the US continue through mediatorsIran said its seven-step plan, rejected by President Trump in September, remains the basis for talks and has been condensed so it could be implemented within two daysThe plan calls for the US to end its blockade of Iranian ports and waive sanctions on oil sales, with Iran reopening the Strait of Hormuz; Iran rejects handing its highly enriched uranium to a third countryOil fell nearly 4% on Monday on deal hopes, though Iranian sources said a new US attack was still seen as more likely than an agreementLater reports of explosions on Qeshm Island, an Israeli media report of a US strike there, and an IRGC claim of downing a US drone remain unconfirmedCIA Director John Ratcliffe is reportedly advising Trump to maintain a “no war, no deal” approach and let economic pressure continueIran said on Monday that contacts with the United States to end their eight-month war were continuing through mediators, after days of talks with Qatari officials ended without a breakthrough. A series of developments since then has undercut the optimism that sent oil prices sharply lower.Foreign Ministry spokesperson Esmaeil Baghaei said messages were being exchanged through mediators but described the issue as complex, Reuters reported. Foreign Minister Abbas Araqchi said consultations had been intensive and that the outcome depended on Washington. Baghaei said Iran’s seven-step plan, which Trump rejected in September, remained the basis for discussions. It has been condensed so that it could be implemented within two days, he said, though Iran’s core position that nuclear talks can only resume once its conditions are met has not changed.The plan would require the US to lift its blockade on Iranian ports, grant a waiver on Iranian oil sales and cancel new sanctions, with Iran reopening the Strait of Hormuz and wider issues left for later talks. Iranian officials also ruled out transferring the country’s highly enriched uranium to a third country.Oil prices fell nearly 4% on Monday on hopes the mediation could produce a diplomatic solution, even as Iranian sources told Reuters they still saw a renewed US attack as more likely than a deal.Hours later, Iranian state news agency IRNA reported several explosions on Qeshm Island in the Strait of Hormuz, with the cause unclear. Israeli broadcaster N12 reported that a US strike had hit an air defense system there as part of limited, unannounced US operations in recent weeks. Iran’s Revolutionary Guards separately claimed to have shot down a US drone over the strait. None of those reports has been officially confirmed.Adding to the picture, Axios reported, citing sources, that CIA Director John Ratcliffe is advising Trump to maintain a “no war, no deal” status quo. He reportedly argues that sustained economic pressure will force further Iranian concessions or provoke internal unrest.Taken together, the developments point to a prolonged standoff rather than an imminent agreement. For energy markets, the key questions are whether Washington engages with Iran’s condensed proposal, and whether the low-level military friction around the Strait of Hormuz escalates further. This article was written by Eamonn Sheridan at investinglive.com.