Global risk assets pared losses on Monday after comments from US President Donald Trump that signalled a potential willingness to relax sanctions on Iran, undermining a recent spike in risk premia. Brent crude, which had jumped as much as 13% on fears of a regional escalation, retraced much of that surge and settled around a 4% gain as markets reassessed the likelihood of prolonged disruption to oil flows.
The Wall Street Journal reported Iranian security officials are pushing to reopen talks with Washington, while the New York Times described Mr Trump saying that US military action, if deployed, could be sustained for "four to five weeks" and that he had three "very good" candidates who could lead Iran — comments he did not elaborate. Mr Trump also suggested he would be willing to lift sanctions if a new Iranian leadership showed pragmatic cooperation, invoking his experience in Venezuela as a template for negotiation and leverage.
Market strategists said the headlines reduced some of the short-term tail risks that had pushed investors into safe assets. Charu Chanana, chief investment strategist at Saxo Markets, said fresh signs that negotiation channels might reopen and Mr Trump’s conditional opening on sanctions removal encouraged profit-taking in havens, while Bloomberg and dealers in Hong Kong and New York flagged short-covering as an additional driver of the rebound.
Despite the relief, analysts cautioned that the underlying regional tensions remain acute and the rebound was measured. Any durable easing of risk premia will hinge on verifiable diplomatic engagement, tangible changes in Iranian behaviour or concrete policy moves in Washington; until then, markets face a two-way risk where sudden escalations could reintroduce sizeable premiums for oil and geopolitical risk.