【TMGM Financial Recap】Why Did Oil Prices Climb After Trump Cancelled Vance’s Talks?

Dismissing the need for an agreement with Iran, Trump posted on Truth Social on November 12: “We don’t need a deal with Iran. Those days are long gone. We have hundreds of billions of dollars of their money, and we control their strait.” At almost the same time, Vice President Vance received instructions to give his “full attention” to investigations into “corruption and crime” across Democrat-governed cities and states.

The prospect of diplomacy had looked very different just one day before. According to The Wall Street Journal, Vance was weighing a face-to-face meeting with Rezaei, secretary of Iran’s Supreme National Security Council, aimed at ending the war. Trump had earlier been “open to” a resumption of negotiations by Vance and had given him authorisation to go ahead. The transition from “authorized to negotiate” to “we don’t need a deal” took less than 48 hours.

What Explains Three Shifts in One Week?

Following the Republicans’ crushing midterm election defeat on November 4, Vance issued a lengthy statement with a blunt verdict: “The root cause of our election defeat was this war.” Rather than a conventional review of an electoral setback, it set out four priorities to put the Republican Party back on course. At the top was “ending the war with Iran”, alongside a call for “changes to the U.S.–Israel relationship.” In a Republican Party dominated by Trump, the vice president had publicly blamed an ongoing war for the election defeat and presented a policy programme separate from the president’s. U.S. media read this as “undisguised criticism” and an effort to “distance himself from Trump.”

On November 5, Trump delivered a forceful response. Whether further strikes against Iran were necessary to secure the “complete elimination of Iran’s nuclear program” would, he said, be decided by the United States.

By November 8–9, his tone had softened. Provided negotiations continued to advance, Trump said, a return to large-scale U.S. military operations was “highly unlikely”. An agreement with Iran was “close”, he added, and there was “no reason” for further escalation. Following his November 9 meeting with Qatar’s prime minister, he described fresh military action as “quite unlikely” and the war as “effectively over from a military standpoint.”

The next turn arrived on November 12: “We don’t need a deal.” Taking Vance’s public effort to distance himself as the beginning of this sequence, a consistent explanation emerges from Trump’s three shifts. He needs to stop the Iran war from being a domestic political liability, but does not want Vance setting the policy direction. The hard line on November 5 pushed back against Vance’s “end the war” framing. Describing the war as “effectively over” on November 8–9 took policy in that direction without admitting that Vance had convinced him. Then, on November 12, declaring that an agreement was unnecessary cancelled the talks just before Vance could claim political credit for negotiating one.

What Does “We Don’t Need a Deal” Signal?

A closer examination of Trump’s Truth Social explanation is warranted. His words were: “We have hundreds of billions of dollars of their money, and we control their strait.”

As a description of the facts, the assertion requires qualification. Although substantial Iranian assets overseas have indeed been frozen by the United States, saying it “controls the strait” goes beyond the reality. October saw 36 attacks on commercial vessels in the Strait of Hormuz, the highest monthly count since the start of the war. Two tankers hit mines and caught fire in the exclusion zone on November 12 itself. Rather than being “under control”, the strait remains contested: neither side can exercise full control.

Viewed as a strategic argument, however, Trump’s position has an internal logic. He regards the leverage already available to the United States, through frozen funds, a naval blockade and economic pressure, as enough to inflict costs on Iran. On that reasoning, an agreement that trades sanctions relief for the abandonment of Iran’s nuclear programme is not necessary.

Such reasoning aligns directly with “neither fighting nor negotiating” as a strategy. Military strikes offer diminishing marginal returns, explaining the absence of fighting. As an analysis by Xinhua put it, “destroying Iran’s military capabilities is unlikely to force it to accept U.S. political conditions, while maintaining maritime and land blockades offers an alternative means of applying economic pressure.” Negotiations, meanwhile, would entail concessions, including the release of frozen funds and the lifting of the blockade. Trump regards those as costs he does not need to incur.

The principal obstacle had already become clear in the framework previously mediated by Qatar and other countries. Iran would invite inspectors into its nuclear facilities and reopen the strait only once the United States had lifted the blockade and released some frozen funds. In other words, “the United States pays first, and Iran delivers later.” The substance of Trump’s November 12 message was a rejection of that order: rather than submit a counteroffer, he would leave the deal behind.

Where Does This Leave Vance?

Having his negotiations stopped by the president is only part of Vance’s position in this contest. His extended statement on November 4 went well beyond a routine review of an election loss. Vice presidents generally refrain from publicly criticising presidential policy in this political system. Yet Vance attributed the electoral defeat to a war still under way and advanced a separate policy programme, including “changing the U.S.–Israel relationship.” The interpretation in U.S. media was that he sought to “distance himself from Trump and position himself for a presidential run in 2028.”

Rather than openly contest Vance’s assessment of the war, Trump chose a precisely targeted response. Indeed, by saying over the subsequent days that the war was “effectively over”, he accepted the direction that assessment implied. His intervention instead removed Vance as negotiator, took him away from the diplomatic stage and assigned him domestic investigations into corruption and crime. That work uses up political capital without delivering a diplomatic achievement.

The negotiating platform that might have strengthened Vance’s national political standing is now gone. His “end the war” appeal to the Republican grassroots, however, has not been rejected. Trump endorsed the direction but ruled out the person who would implement it. Iran policy therefore remains a point of distinction that Vance can draw on against Trump in the 2028 Republican presidential primaries.

What Did Oil and Gold Markets Price In?

Oil advanced while gold retreated in a clear market response. Brent crude finished 3.3% higher at $95.82, and WTI gained 2.55% to $88.74. For spot gold, the move below $3,900 included losses of as much as 2.8% at one stage.

A geopolitical risk premium returning to prices provided the immediate driver of the oil rally. Markets had been factoring in the possibility of peace before Trump spoke. Having touched a six-month high in late October, Brent was on course for its second successive weekly fall. Among the drivers were “some recovery in Middle Eastern oil flows” and “hopes that the Democrats’ midterm election victory would accelerate an end to the conflict.” By removing expectations of an imminent agreement, Trump’s remarks led oil prices to rebuild some of the geopolitical premium that had earlier unwound.

The oil-price implications of “neither fighting nor negotiating”, however, are fundamentally different from those of an intensifying war. CFi.cn’s analysis made a significant qualification: “The likelihood of a geopolitical premium continuing to build to more than $20, as it did in October, is very small.” While escalation risk can lift oil prices, attrition through neither fighting nor negotiating produces an enduring structural constraint on supply, not an abrupt disruption. It cannot sustain an indefinite surge in oil prices. What it does remove is the downward catalyst that expectations of a peace deal had supplied.

For gold, the reasoning behind the fall was different. The existence of a conflict alone has never determined gold pricing; real interest rates and safe-haven demand work together. A framework of “neither fighting nor negotiating” removes the tail risk of military escalation, while drawn-out economic attrition delivers no immediate shock to the global financial system. The safe-haven premium linked to a widening war consequently falls away. At the same time, structurally high oil prices could keep inflation more persistent, potentially supporting gold over the longer term. That support needs time to develop, whereas the loss of the safe-haven premium is immediate.

Why Is “Neither Fighting Nor Negotiating” So Fragile?

Keeping pressure in place with “no end date” leaves oil carrying a moderate but persistent geopolitical premium. A crisis may not follow, yet petrol prices will transmit that premium to voters’ perceptions of living costs. Those costs are precisely the issue that has just cost Republicans the midterm elections. Among the four priorities in Vance’s November 4 statement was “focusing on the public’s cost of living and inflation”. Ending his negotiating assignment has not allowed Trump to eliminate the issue’s political force.

Should this strategy keep oil from returning to levels voters regard as comfortable in the months ahead, a Democratic-controlled Congress will have strong incentives to pursue the argument that “the president’s refusal to negotiate is keeping oil prices high” through repeated investigations and hearings. In those circumstances, “we don’t need a deal” would cease to be a statement of strength and become a political liability that needs continual defence.

Conditions in the Strait of Hormuz present a further weakness. Despite Trump’s claim to “control the strait”, October’s 36 attacks on commercial vessels and the tanker mine strikes and fires on November 12 demonstrate that maintaining safe passage has not become less costly merely because the United States “doesn’t need a deal.” Under this framework, continued Iranian tests of shipping security through low-intensity actions, including mines, small-boat harassment and GPS interference, would leave the United States with two options. It could intensify its military response and return to fighting, or tolerate continuing shipping losses and absorb the economic cost of refusing negotiations. Either course leads back to the political burden Trump is seeking to escape.

The appearance of stalemate in “Neither fighting nor negotiating” reflects the reality. This is not, however, a position in which Trump has become trapped; it is one he has deliberately chosen. By buying time and retaining room for manoeuvre, he is wagering that Iran’s economy will give way before American voters run out of patience.