• Donald Trump says the United States is holding discussions with a “new regime” in Iran to end military operations.
• The US president threatens to destroy Iran’s energy infrastructure if no agreement is reached.
• The comments raise geopolitical concerns around the Strait of Hormuz and global Oil supply.

US President Donald Trump said on Monday that the United States (US) is engaged in “serious discussions” with what he described as a “new and more reasonable regime” in Iran, while warning that Washington could launch massive strikes on the country’s key energy infrastructure if a deal is not reached soon.

Trump added that the talks are aimed at ending US military operations in Iran. He suggested that significant progress had been made and indicated that an agreement was still likely.

However, the US president also issued a stark warning to Tehran. If negotiations fail to produce a deal quickly and if the Strait of Hormuz is not immediately reopened to commercial traffic, the United States could respond by targeting major Iranian infrastructure.

Trump said the US could “blow up and completely obliterate” Iran’s electric generating plants, Oil wells, and Kharg Island, a key Oil export terminal through which much of the country’s Crude shipments pass. He also suggested desalination plants could be targeted.

According to Trump, these facilities have so far been deliberately spared by US forces.

Market reaction

The reaction in currency markets remains limited for now. The US Dollar Index (DXY) trades around 100.30 at the time of writing on Monday, up 0.10% on the day, suggesting that investors have so far largely shrugged off the comments.