U.S. and Iran Pause Attacks for Second Day as Markets React

The United States and Iran held their fire for a second consecutive day on Sunday, a pause that rippled through global markets and shifted diplomatic attention toward reviving a fraying interim ceasefire deal. U.S. President Donald Trump, according to his ambassador to the United Nations Mike Waltz, is "giving talks some space" after nearly two weeks of American strikes on Iranian coastal areas and infrastructure. The escalation had been triggered by Iran firing on ships attempting to transit the Strait of Hormuz, a choke point for a fifth of the world’s oil supply (AP India).

The lull in direct hostilities did not bring silence to the region. On Monday, Saudi Arabia reported shooting down drones launched by Iran-backed militias in Iraq targeting its petroleum facilities, while Yemen’s Houthi rebels claimed a separate attack on Saudi oil infrastructure. Jordan also intercepted two drones over its territory, and two strikes hit a Kurdish Iranian dissident group in Iraq. No casualties or damage were reported from the scattered incidents, but regional officials described them as a test of the new pause’s durability (AP India).

Mediators led by Qatar and Pakistan reported "significant" progress in bridging the gap between Washington and Tehran. The negotiations are focused on a mechanism to manage vessel transit through the Strait of Hormuz with fewer restrictions, a compromise intended to restore commercial flow through the waterway. Shipping traffic there has fallen to a three-week low, according to a U.S. Navy-overseen maritime body, which confirmed no new attacks on shipping in the preceding 72 hours (AP India).

Markets responded immediately to the de-escalation. Brent crude futures dropped 5.8% to $86.40 a barrel on Monday, reversing a surge that had briefly pushed prices above $100 last week. The S&P 500 slipped 0.1% in mixed trading, while the Dow Jones Industrial Average edged up 0.2%. Bond yields fell, with the 10-year Treasury yield dipping to 4.64%. The retreat in oil prices eased immediate inflation fears, though traders still priced in a roughly 36% chance the Federal Reserve would raise interest rates at its upcoming meeting (AP India).

The human toll of the recent fighting remained a point of contention. The Pentagon’s official casualty system removed four American troops killed in recent weeks—three in a July 17 missile and drone strike on a base in Jordan and one in Iraq—from its "Iran war" tally, placing them in a new "Overseas Operations" category alongside 207 wounded personnel. The Defense Department described the shift as the result of "temporary data disruptions," though the move raised questions about the transparency of the conflict’s cost. President Trump had previously confirmed the total death toll at 18 in a social media post (AP India).

Diplomacy extended beyond the Gulf. Israeli Prime Minister Benjamin Netanyahu, speaking on Fox News, said Iran would be the top agenda item in an upcoming meeting with Trump. He also dismissed International Criminal Court war-crimes charges against him as "bogus" and accused New York Mayor Zohran Mamdani of "fomenting hate" for suggesting Netanyahu should be arrested if he attends the United Nations General Assembly in September (AP India).

Iran’s army spokesperson confirmed to state television on Sunday that Tehran had halted its attacks in response to the American pause. However, an Iranian spokesperson later told Reuters that Tehran had not formally asked for a resumption of talks with Washington. With the 60-day interim deal signed in mid-June now in its second half, core disputes—particularly over Iran’s nuclear program—remain unresolved as mediators work to keep both sides at the table (AP India).