U.S. President Donald Trump denied a report by the U.S. online outlet Axios that Washington is willing to ease sanctions or release frozen funds if Iran takes concrete steps on its nuclear program. Iran, for its part, signaled that an agreement before the Nov. 3 midterm elections is unlikely. Behind-the-scenes negotiations between the two countries are nonetheless continuing.
In a post on the social media platform Truth Social on the 28th, Trump pushed back against the report, saying it was not true and that he had offered nothing.
Bloomberg also reported that Iran had proposed reopening the Strait of Hormuz within seven days if the United States took certain steps, but that Trump rejected the offer. Washington did not accept Tehran's condition that the U.S. first lift its naval blockade and oil sanctions. Talks the two sides held in New York last week on the sidelines of the U.N. General Assembly are also understood to have produced little progress.
The sticking points are the nuclear program and the Strait of Hormuz. One U.S. official said there would be no agreement unless the Iranian nuclear issue is resolved, adding that Trump is willing to ease sanctions and release frozen funds in return for concrete progress on the nuclear front. The U.S. government has told mediating countries that Iran must firmly commit to reopening the strait and make concessions on its nuclear program. But Iranian President Masoud Pezeshkian said in an address to the U.N. General Assembly last week that Tehran is not seeking to build nuclear weapons, while adding that it would not give up its right to develop nuclear technology for economic purposes.
Iranian officials have consistently expressed a willingness to pursue a diplomatic solution but say they do not trust the Trump administration to honor the terms of any agreement. The United States also distrusts Iran, and Trump has previously questioned the prospects of a deal before the midterm elections. Speaking to reporters in the Oval Office that day, Trump said the United States would win, adding that in his view the matter would be resolved one way or the other and would move fairly quickly.
Iranian officials assess, however, that the war, now in its eighth month, is unlikely to end before the U.S. midterm elections in November. Tehran instead sees a strong chance that the conflict will escalate after the vote. A memorandum of understanding the two sides signed in mid-June led to a cease-fire and increased traffic through the strait, but it collapsed after about two weeks. It drew broad criticism across the U.S. political spectrum as conceding too much to Iran, particularly on sanctions relief, while Iran continued to restrict passage through the strait.
With the odds of a U.S.-Iran agreement swinging back and forth, global oil prices and interest rates have been volatile as well. Brent crude climbed to as high as around $120 a barrel in the early stages of the war this year, but gains have been narrowing as the conflict drags on. Should attacks resume and Brent hold at $120 to $130 a barrel, the Federal Reserve's terminal rate could rise and economic growth could slow. Lee Jae-man, an analyst at Hana Securities, said oil prices are the single most important factor determining the economy and long-term interest rates.
