Trump swings back toward diplomacy in escalating war with Iran
After threatening a “massive attack,” the president said his envoys were talking with Tehran but left open the possibility of a sharp military escalation.
Last updated: 2026-07-26 16:56:51 ET
Pulse AI Brief
Updated Jul 26, 2026 3:00 PM ET
Four U.S. soldiers were killed in Middle East combat as escalation with Iran intensifies, with Trump and Defense Secretary Hegseth attending a dignified transfer ceremony. U.S. Ambassador Mike Waltz signaled continued military posture while discussing potential Saudi nuclear deals, and Sen. Bernie Sanders called for a negotiated end to the conflict.
Geopolitical risk premiums will likely widen energy markets; oil prices already surpassed $100 per barrel last week amid Middle East tensions. Defense contractors and military-adjacent equities may see flight-to-safety flows, while broader equity markets face headwinds from war-related uncertainty and potential supply chain disruptions.
CBS News polling shows Americans are frustrated with both the Iran war and the economy, a dual headwind for the Trump administration heading into the 2026 midterms. The conflict threatens to dominate the political agenda and could reshape congressional dynamics if casualties mount.
After threatening a “massive attack,” the president said his envoys were talking with Tehran but left open the possibility of a sharp military escalation.
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West Texas Intermediate and Brent crude’s front-month contracts rose almost 4% on Wednesday after an 11th night of attacks in Iran.
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