Pakistan Says US, Iran Close to Deal Despite Trump Rhetoric

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(Bloomberg) — Pakistan’s defense minister said the US and Iran are “close to some sort of arrangement” over the Strait of Hormuz, even after both sides appeared to harden their positions in the long-deadlocked negotiation. 

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“Things are shaping up in favor of peace,” Khawaja Asif told reporters in Islamabad on Tuesday, without giving details of any breakthrough. Talks between Iran and Oman about reopening Hormuz to some maritime shipping have reached an advanced stage, Al Jazeera reported earlier, citing a Qatari Foreign Ministry spokesperson.

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Oil prices erased gains following Asif’s comments, the latest in a long run of conflicting statements about the status of talks over the critical waterway. Pakistan has been mediating during the conflict, alongside Qatar.   

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The upbeat assessments came after US President Donald Trump toughened his stance, saying on Monday that Tehran should pay reparations for those killed in attacks linked to the Islamic Republic as well as in domestic protests. His comments came in response to a series of demands laid out by Iran over the weekend, including compensation for US violations of a now-lapsed interim peace deal agreed by the sides in June.  

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Iran will almost certainly reject Trump’s latest demands, which the US leader said will be included “firmly into any, and all, future negotiations.” The back and forth appeared to reduce the chance that the warring parties will be able to agree to any immediate pact on the waterway, where around a fifth of the world’s oil and liquefied natural gas flowed before the conflict began on Feb. 28. 

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Brent crude traded slightly lower in early afternoon trade in London, at about $87.50 a barrel. 

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European diesel futures surged more than 10% as refineries in Libya and Russia came under attack, further tightening the market for the fuel considered the workhorse of the global economy. Saudi Arabia extinguished a fire at its Jazan oil refinery early Sunday, the country’s energy ministry said, with Yemen’s Houthi militants claiming an attack on the facility hours later. 

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“The region cannot remain indefinitely in a state of neither war nor peace,” Anwar Gargash, senior diplomatic adviser to the president of the United Arab Emirates, wrote in a post on X. “Its stability and the future of its peoples require clarity in vision and direction.” 

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In a sign of ongoing tensions, the UK navy said it received a report on Tuesday of an incident involving a container ship and military forces in the Gulf of Oman, without providing further details. It was also informed of an incident off Yemen’s Red Sea coast in which a cargo vessel reported being hit by an unknown projectile, resulting in casualties.

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Vanguard Tech said separately that a Panama-flagged container ship was hit by a missile, and that the strike had left the vessel without a command. It wasn’t clear who was behind the strike, but it occurred near the line of the US blockade.