WASHINGTON / TEHRAN / NEW YORK, Feb 22 — Escalating US-Iran tensions entered a new diplomatic phase after Iranian Foreign Minister Abbas Araghchi stated that the nuclear dispute between Tehran and Washington can only be resolved through negotiations, even as military rhetoric from the United States continued to intensify.
Araghchi declined to speculate on whether U.S. President Donald Trump intends to authorize a strike against Iran, saying it would be inappropriate to comment on internal U.S. decision-making. Instead, he emphasized that dialogue remains the only sustainable mechanism for resolving disagreements surrounding Iran’s nuclear programme.
His remarks come amid heightened geopolitical risk as Washington has signaled that military options remain available should diplomatic engagement fail ahead of anticipated talks in March.
Diplomacy Versus Deterrence
The contrast between Tehran’s public call for diplomacy and Washington’s firm tone reflects the complex strategic positioning on both sides.
Iran has repeatedly maintained that its nuclear activities are peaceful and compliant with international oversight frameworks. Araghchi reiterated that pressure and threats would not produce constructive outcomes, arguing that negotiations must occur on the basis of mutual respect and balanced commitments.
Meanwhile, U.S. officials have stressed that enforcement mechanisms remain active if Iran does not address key concerns related to enrichment levels and transparency measures.
This divergence between diplomatic language and deterrence signaling has increased uncertainty across global markets.
Nuclear Negotiations Ahead
Diplomatic engagement is expected to resume in March, though the structure and format of talks remain subject to negotiation.
Core issues likely to dominate discussions include:
- Limits on uranium enrichment
- International inspection access
- Sanctions relief sequencing
- Regional security considerations
Analysts note that both sides face internal political pressures that could influence negotiation flexibility.
For Tehran, economic strain resulting from sanctions remains a significant domestic issue. For Washington, demonstrating firmness on nuclear oversight aligns with broader strategic messaging.
Market Response: Gold and Dollar Strengthen
Financial markets reacted cautiously to the developments.
Gold prices advanced as investors increased safe-haven allocations amid geopolitical uncertainty. The metal’s upward move reflected risk aversion rather than macroeconomic inflation dynamics.
The U.S. Dollar Index also registered gains, supported by liquidity demand during periods of geopolitical stress. The dollar often benefits from flight-to-safety flows, particularly when global risk appetite weakens.
Currency markets displayed moderate volatility, with traders repositioning ahead of potential diplomatic or military headlines.
Oil Markets Sensitive to Escalation Risk
Crude oil prices edged higher as geopolitical risk premiums widened.
The Middle East remains central to global energy supply chains, and even speculative threats of disruption in transit routes such as the Strait of Hormuz can affect pricing structures.
Energy analysts indicated that while no physical supply disruption has occurred, markets are pricing in elevated uncertainty.
Sustained escalation could lead to more pronounced movements in energy contracts.
Strategic Military Signaling
Although Araghchi focused on diplomacy, U.S. military positioning in the region has drawn attention.
Recent deployments and readiness measures reflect Washington’s strategy of maintaining leverage during negotiations.
However, no official announcement has been made confirming immediate operational plans.
Political observers note that strong rhetoric does not necessarily equate to imminent military engagement, though it contributes to headline-driven volatility.
Regional and Global Implications
The persistence of US-Iran tensions extends beyond bilateral relations.
Regional equity markets in the Gulf have shown sensitivity to developments, while global investors monitor energy-linked inflation risks.
Safe-haven demand trends suggest institutional caution rather than panic.
Bond yields, commodities, and major currency pairs are likely to remain responsive to diplomatic messaging in the coming days.
Broader Economic Context
Geopolitical tensions intersect with broader global economic conditions.
Energy prices remain a key inflation variable for import-dependent economies. A sustained increase in crude oil could reintroduce inflationary pressures in developed and emerging markets alike.
Central banks are likely monitoring developments closely, particularly in relation to commodity-driven price fluctuations.
Outlook
The immediate trajectory of US-Iran tensions depends on diplomatic engagement clarity and the tone of future official statements.
If March negotiations progress constructively, market volatility may ease.
Conversely, intensified rhetoric or operational signaling could amplify risk-off flows across assets.
For now, Araghchi’s emphasis on diplomacy introduces a moderating message, though geopolitical uncertainty remains elevated.