The Trump administration has warned it would be “very wise” for Iran to make a deal, amid reports the White House is considering fresh military action against Tehran as soon as this weekend.

It comes shortly after Vice President JD Vance accused Iran of failing to address core U.S. demands during nuclear talks in Switzerland this week. Iran’s foreign minister previously reported progress in the talks, saying the two countries had reached an understanding over the “guiding principles” for the negotiations.

Speaking at a news briefing Wednesday, White House Press Secretary Karoline Leavitt said there were “many reasons and arguments that once could make for a strike against Iran,” noting that the two countries remain “very far apart” on some issues.

The U.S. president had a “very successful” operation last June, Leavitt said, when U.S. stealth bombers struck three Iranian nuclear facilities as part of “Operation Midnight Hammer.”

“The president has always been very clear though with respect to Iran or any country around the world, diplomacy is always his first option. And Iran would be very wise to make a deal with President Trump and this administration,” Leavitt said.

The White House has said it still hopes to reach a diplomatic resolution over Tehran’s nuclear program, although U.S. media has reported that the military could be prepared to strike Iran as early as the weekend.

The U.S., for its part, has built up a significant presence of air and naval assets, while Iran has conducted military drills in the strategically vital Strait of Hormuz and announced joint naval drills with Russia in the Sea of Oman.

Laura James, Middle East senior analyst at Oxford Analytica, described the current situation as “extremely dangerous,” with the U.S. and Iran “certainly closer” to an outright conflict than last week.

“The thing that is now a particular concern over the past 24 hours is the very rapid pace at which the United States is reinforcing its air power in the region. That, of course, can still be signalling and pressure for a particular diplomatic outcome,” James told CNBC’s “Access Middle East” on Thursday.

“But as more and more planes comes in and more and more equipment comes in, that signalling gets more and more expensive. And therefore, the payoff you want for it in diplomatic terms has to be larger — and there is simply no sign Tehran can offer the absolute minimum that Washington is likely to demand,” she added.

Oil prices

Energy market participants have been closely watching the outcome of the U.S.-Iran talks in Geneva, particularly as it relates to the Strait of Hormuz, a major international waterway that Iran partially closed on Tuesday citing “security precautions.”

Located in the gulf between Oman and Iran, the Strait of Hormuz is recognized as one of the world’s most important oil choke points.

About 13 million barrels per day of crude oil transited the Strait of Hormuz in 2025, accounting for roughly 31% of global seaborne crude flows, data provided by market intelligence firm Kpler showed.

Oil prices were higher on Thursday, extending gains after settling up more than 4% in the previous session.

International benchmark Brent crude futures with April delivery rose 1.5% to $71.41 per barrel, while U.S. West Texas Intermediate futures with March delivery stood 1.7% higher at $66.27.

— CNBC’s Lee Ying Shan contributed to this report.

LONDON — European stocks opened higher on Wednesday as investors weighed the latest U.K. inflation data and monitored global market developments.

The pan-European Stoxx 600 was roughly 0.5% higher shortly after the open, and the U.K.’s FTSE 100 and France’s CAC 40 were up 0.3%, while Germany’s DAX rose 0.4%.

German life sciences company Bayer extended losses and was down 7.3% in early trading after its Monsanto Unit had proposed paying $7.25 billion to settle lawsuits claiming that its weed killer Roundup was causing cancer, it said in a press release on Tuesday.

It said it expects its provisions and litigation liabilities to rise from 7.8 billion euros ($9.24 billion) to 11.8 billion euros, with approximately 5 billion euros in litigation-related payments in 2026. Bayer expects a negative free cash flow for this year.

The UK inflation rate fell to 3% in January, according to the latest figures from the Office for National Statistics. Economists polled by Reuters had forecast the consumer price index to fall to 3%, down from 3.4% in the twelve months to December.

“The UK has experienced higher and more prolonged inflation compared to the US or eurozone area, but today’s data shows the tide is changing,” David Smith, portfolio manager at Henderson High Income Trust plc, said.

“Inflation is likely to drop to 2% by the end of the year if not earlier, opening the door to further interest rate cuts by the Bank of England,” Smith added.

The British Pound was flat against the dollar following the as-expected data, at $1.3562. British government bond yields, known as gilts, also held steady.

Sterling dipped and British government bond yields fell during Tuesday’s trading session after data showed the U.K.’s unemployment rate rose to a five-year high, while wage growth slowed.

Earnings on Wednesday come from Glencore, BAE Systems, Orange and Euronext. 

Asian stocks pushed higher overnight in holiday-thinned trade with markets in mainland China, Hong Kong, Singapore, Taiwan and South Korea among those closed for Lunar New Year holidays.

U.S. stock futures were near the flatline in overnight trading after a tepid session on Tuesday. Traders on Wednesday will be watching for the Federal Reserve minutes from the policymakers’ January meeting.

The next big catalyst this week, however, will likely be the personal consumption expenditures price index reading that’s due on Friday. The PCE, the Fed’s preferred inflation gauge, will give further insight into the state of the economy.

— CNBC’s Pia Singh contributed to this market report.