President Masoud Pezeshkian is set to lead an Iranian delegation at the United Nations General Assembly in New York on Tuesday, as fresh optimism emerges for a diplomatic resolution to the Middle East conflict.

According to the semi-official Tasnim news agency, Pezeshkian will deliver a speech before the assembly, outlining Iran’s stance on “international developments,” with special attention to its conflict with the U.S. and Israel.

He is also expected to meet with several world leaders on the margins of the gathering, which runs from Sept. 22 to 26, and Sept. 28.

The Iranian delegation’s participation at the UN has sparked renewed optimism for a diplomatic path out of the war, boosting market sentiment on Monday — equities climbed, oil prices softened, and global bond yields dropped sharply.

However, U.S. President Donald Trump — who has indicated willingness to meet Pezeshkian during the assembly — has warned that Iran’s economy would be devastated or its leadership eliminated if Tehran fails to reach an agreement.

Speaking to Fox News on Sunday, Trump said the only choices available were “wiping Iran out,” or allowing its economy to “rot,” unless a deal is reached.

Meanwhile, Iran’s military said its intelligence pointed to a new, large-scale strike being orchestrated by the U.S. and its allies, cautioning of “painful” retaliation throughout the Middle East. Any regional nations supporting such an attack would be considered participants in the conflict, it added.

“If the U.S. commits any error against the Islamic Republic of Iran, all its positions and interests in the region will face sustained, effective and painful strikes,” the Khatam al-Anbia Central Headquarters of Iran stated, per Tasnim.

Houthi-Saudi conflict complicates diplomacy hopes

The U.S. State Department issued a security alert over the weekend, warning of potential unforeseen escalation in the Middle East and urging Americans to stay vigilant and prepare for possible flight cancellations and airspace closures.

The alerts followed claims by Iran-backed Houthi militants of missile and drone strikes on Riyadh on Saturday, which triggered the first air-raid warning in the Saudi capital since hostilities intensified in July.

Saudi officials reported that a ballistic missile was intercepted and destroyed, with no casualties or damage. The Houthis also tried to strike civilians and infrastructure across multiple areas of the kingdom, according to Saudi-led coalition spokesperson Major-General Turki al-Maliki, who posted on X on Saturday that those attempts were repelled by the country’s air defenses.

Despite widening hostilities, oil prices have retreated in recent days as traders anticipate a recovery in energy shipments from oil-rich Saudi Arabia.

Oil prices will stay elevated despite U.S. advances in moving oil through the Strait of Hormuz, a team of analysts at Eurasia Group noted in a Saturday report. Any increase in oil flows would be insufficient to close the overall market deficit, they said, projecting Brent prices to trade in a higher range of $90-110 per barrel for the remainder of this year.

“Iran’s leadership will stick with resistance, even as they quarrel internally,” the consultancy firm stated, noting that Tehran aims to use military proxies and tanker attacks to maintain a chokehold on shipping flows and pressure Washington into concessions.

Tehran has maintained it will not reopen the Strait of Hormuz until Washington honors its commitments under the June memorandum, which called for lifting the naval blockade of Iranian ports, easing sanctions, unfreezing Iranian assets, and ending U.S. military threats.

Iranian parliament speaker Mohammad Bagher Ghalibaf said Sunday that Iran must continue both fighting and negotiating to push back its adversaries, and only pursue diplomacy when it holds the advantage on the battlefield.

On Monday, crude oil prices saw a sharp decline, trading below $100 per barrel, after President Donald Trump reportedly opted against bombing Yemen for the time being and signaled openness to diplomacy with Iran. U.S. West Texas Intermediate futures decreased by 5.4% to $94.85 per barrel by 10:48 a.m. ET. Brent crude, the international benchmark, experienced a fall of 4.1% to $99.61 per barrel. Oil prices have declined for four consecutive sessions as the market retreats from the recent rally. Trump informed Fox News that he might be willing to meet with Iranian President Masoud Pezeshkian during this week’s UN General Assembly. Additionally, the U.S. president has chosen not to bomb Iran-allied Houthi militants at present, despite appeals from Saudi Arabia, according to Trump administration officials who spoke to The New York Times. In the meantime, crude exports from the Middle East have remained resilient following Saudi Arabia’s shutdown of its crucial East-West pipeline due to attacks, as stated by JPMorgan analysts in a note dated Sept. 18. Total oil flows averaged 17 million barrels per day over the past 10 days, which is 6 million bpd below the 2025 average, they reported. Exports through the Strait of Hormuz have steadily increased, with flows from the broader Middle East reaching approximately 80% of pre-war levels, according to Ryan McKay, director of commodity strategy at TD Securities. McKay stated in a Monday note that without a major escalation, Iran may have lost significant leverage in the Strait. However, the security situation in the region continues to be volatile and susceptible to sudden escalation. McKay noted that the oil market is struggling with multiple near-term drivers that are engaged in a tug of war for prices. The Houthis announced that they launched missiles at Riyadh, the Saudi capital, and targeted Aramco facilities at the Yanbu crude export terminal on the Red Sea over the weekend. At least two tankers have been attacked while transiting the Strait of Hormuz in the past day, based on incident reports from the United Kingdom Maritime Trade Operations Centre. Trump also told Fox that he is in a ‘deciding mode’ and that ‘very big things’ will happen soon concerning the Iran war. He described the options as ‘wiping Iran out, letting them rot economically, or making a deal,’ as reported by Fox. Meanwhile, Iran’s Revolutionary Guard warned that it will expand the ‘geography of the conflict’ if the U.S. launches renewed strikes against the Islamic Republic, according to the state media outlet Tasnim.

President Masoud Pezeshkian will lead an Iranian delegation at the United Nations General Assembly in New York on Tuesday, amid renewed hopes for a diplomatic solution to the Middle East conflict.

Pezeshkian will address the assembly and present Iran’s positions on “international developments,” according to the country’s semi-official Tasnim news agency, with a particular focus on its war with the U.S. and Israel.

He will also hold talks with the leaders of several countries on the sidelines of the event, which is scheduled to take place Sept. 22 to 26, and 28.

The Iranian delegation’s attendance at the UN has renewed hopes for a diplomatic solution to the war, lifting market sentiment on Monday, with stocks rising, oil prices easing and global bond yields falling sharply.

But U.S. President Donald Trump, who has said he would be open to meeting Pezeshkian during the assembly, has threatened to destroy Iran’s economy or eliminate its leadership if Tehran doesn’t strike a deal.

Trump told Fox News on Sunday that the only options on the table were “wiping Iran out,” or letting its economy “rot,” unless both sides reach a deal.

Separately, Iran’s military said that its intelligence suggested a new, large-scale strike being prepared by the U.S. and its allies, warning of “painful” retaliation across the Middle East. Regional countries backing such a strike would be treated as parties to the conflict, it said.

“If the U.S. makes any mistake against the Islamic Republic of Iran, all its positions and interests in the region will be targeted by sustained, effective and painful attacks,” the Khatam al-Anbia Central Headquarters of Iran said, according to Tasnim.

Houthi-Saudi conflict complicates diplomacy hopes

The U.S. State Department this weekend issued a security alert citing risks of unforeseen escalation in the Middle East, telling Americans to exercise more vigilance and be aware of possible flight cancellations and airspace closures.

The warnings came after Iran-backed Houthi militants claimed missile and drone attacks on Riyadh on Saturday, triggering the first air-raid alert in the Saudi capital since fighting escalated in July.

Saudi authorities said they intercepted and destroyed a ballistic missile and reported no casualties or damage. The Houthis also attempted to target civilians and infrastructure in several parts of the kingdom, Saudi-led coalition forces spokesperson Major-General Turki al-Maliki said on X on Saturday, though those attacks were thwarted by the country’s air defenses.

Oil prices have pulled back in recent days despite widening hostilities, as traders hope for a recovery in energy shipments from oil-rich Saudi Arabia.

Oil prices will remain high despite U.S. progress in moving oil through the Strait of Hormuz, a team of analysts at Eurasia Group said in a Saturday note. Any rebound in oil flows would not be enough to address the overall market deficit, they said, forecasting Brent prices to trade in a higher band of $90-110 per barrel through the rest of this year.

“Iran’s leadership will stick with resistance, even as they quarrel internally,” according to the consultancy firm, as Tehran seeks to use military proxies and tanker attacks to keep a chokehold on shipping flows, to pressure Washington into concessions.

Tehran has insisted that it would not reopen the Strait of Hormuz until Washington fulfills its commitment under the June memorandum, which called for lifting the naval blockade of Iranian ports, easing sanctions, unfreezing Iranian assets and ending U.S. military threats.

Iranian parliament speaker Mohammad Bagher Ghalibaf said Sunday that Iran must keep on fighting and negotiating, to push back its enemies, and only work on diplomacy when it has the upper hand on the battlefield.