Trump rules out nukes and ground troops for Iran, keeps Pickaxe strike open

By themselves, the statements are unlikely to move oil prices far, restating positions already made public. But they bolster the geopolitical risk premium for crude by leaving the possibility of bombing Iran's remaining nuclear sites open. The primary oil concern is the Strait of Hormuz: escalated conflict prompting more Iranian tanker attacks would squeeze already tight shipping and send prices above $100. Excluding atomic bombs and ground forces reduces a small amount of tail risk, and Trump's pre-midterm pause buys short-term relief. As across the whole conflict, rising oil drives inflation and expectations of Fed rate rises, weighing on gold rather than supporting it.

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Trump has removed nuclear weapons and ground troops from the options, but bombers remain, and for oil markets the mountain close to Natanz is still a live target.

In brief:

• Trump informed Newsmax he would not deploy nuclear arms against Iran and does not foresee US soldiers on the ground there
• He stated Washington might need to strike Pickaxe Mountain, a subterranean location near Natanz connected to Tehran's atomic programme
• He noted discussions with Russia and China on denuclearisation, providing no specifics
• The president stated last week that the US would not attack Iran ahead of the November midterms
• CBS News has disclosed US preparations to deploy a huge conventional bomb against Iranian military targets if commanded
• Disruption in Hormuz and assaults on tankers keep US crude trading near $97, even with accelerated releases of emergency stocks by IEA countries

Donald Trump stated he would not use atomic weapons against Iran and did not foresee deploying infantry into the country. He left the door open to an attack on Pickaxe Mountain, the subterranean facility near Natanz that experts connect to Iran's nuclear work.

In a Newsmax interview, Trump said the US might need to target Pickaxe Mountain. He also mentioned he was in talks with Russia and China on denuclearisation, offering no details about the conversations.

Pickaxe Mountain, called Kuh-e Kolang in Iran, is a tunnel system dug into a hill a short distance from Natanz. Iran designated it a centrifuge assembly location in 2021, and analysts think it is roughly 100 metres below the surface. It is commonly referred to as the last major nuclear-related site in Iran to survive attacks, and Trump has menaced it often since July. Analysts have warned that the largest US bunker-buster bombs may still fail to ensure it is destroyed.

The remarks contribute to conflicting messages out of Washington. Last week, Trump said the US would not strike Iran before the early-November midterm elections and referred to constructive talks with Tehran. Simultaneously, CBS News has reported that the White House and Pentagon have ready plans to drop one of the biggest US conventional bombs on Iranian military sites, if Trump commands it. Excluding atomic weapons and ground forces reduces the spread of options but keeps aerial bombing as a possibility.

For energy markets, the central question is what an escalation would do to the Strait of Hormuz, where a big slice of global oil usually flows. Shipping in the strait has been heavily interrupted in the conflict, and Iranian strikes on tankers have risen lately. US crude was trading close to $97 a barrel on Thursday, near the $100 level. Worries over supply held prices up even as IEA countries took steps to accelerate the release of emergency oil reserves.

On their own, the comments are not likely to move oil prices a great deal, mostly repeating earlier Trump stances. However, they indicate an attack on Iran's leftover nuclear facilities is still a real possibility after the pre-election break finishes, sustaining a geopolitical risk premium in oil.

The coming indicators are any hint of advancement in communications with Tehran before the midterms, more strikes on vessels in Hormuz, and whether the stated pause from Washington remains intact.