US-Iran Nuclear Talks Stall as Israel-Hezbollah Clashes Rage On

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It’s not yet clear how the latest developments will affect the Hormuz strait. Traffic through the key waterway appeared to thin early Friday, a day after it surged following an agreement between the two countries to lift a dual blockade.

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On Friday, Iran said ships that cross the strait will need its permission, setting the stage for a likely contentious debate over future tolling arrangements, with the US, Europe and Gulf Arab states balking at the idea of Tehran imposing fees.

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Oil rose slightly on Friday, with Brent up about 0.9% to $80 per barrel. Prices dropped about 7.7% this week, with traders anticipating the reopening of Hormuz strait will ease the biggest energy-supply crunch in history, but remain roughly 30% higher for the year because it will take months for flows to return to normal. 

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The war in the Middle East erupted on Feb. 28, when the US and Israel launched air strikes on Iran. The Islamic Republic struck back, firing missiles and drones at Israel and nations across the Gulf, and thousands of people were killed. 

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While the US and Iran agreed a temporary truce in early April, conflict in Lebanon has continued. The Israeli military said four of its soldiers, including a battalion commander, were killed on Friday. Israel’s attacks killed 18 people the same day, Lebanon’s National News Agency said, while the Israeli military said it targeted 80 Hezbollah sites. The Lebanese health ministry put the Friday evening death toll at 47. 

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Iran sees the US as having “direct responsibility” for the situation in Lebanon and Israel’s military actions, foreign ministry spokesman Esmail Baghaei said in statement cited by state-run Islamic Republic News Agency. 

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Strains between the US and Israel over Lebanon are growing. Trump has sworn at Israeli Prime Minister Benjamin Netanyahu in calls, accusing him of almost scuppering the memorandum with Iran by escalating strikes. Israel insists it will keep troops across its borders until it’s sure Hezbollah, designated a terrorist organization by the US, is no longer a threat.

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Lebanese President Joseph Aoun said the latest Israeli escalation is undermining the ceasefire efforts.

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A poll aired on Israel’s top-rated Channel 12 TV showed 67% of Israelis see the US-Iran deal as bad for their country, 9% see it as good and the remainder are undecided.

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The US-Iran memorandum has led to Washington lifting a naval blockade of Iranian ports and Iran saying it will reopen the Hormuz strait. They have agreed to extend their ceasefire during the new round of talks, which are meant to finish within 60 days but can be extended.

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The sides will try to agree on restricting Iran’s processing of nuclear fuel, possibly for a decade or more, and destroying or diluting its existing stocks of highly-enriched uranium.

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The US and Israel say they attacked Iran to stop it from building an atomic weapon. Tehran has long denied wanting to do that, but has enriched uranium to far beyond the levels needed for nuclear power plants.

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Many atomic experts say 60 days won’t be enough to work out a permanent deal with Iran, given the complex and technical nature of the topic. A 2015 nuclear accord between Iran and world powers including the US, which Trump regularly derides and abandoned during his first term, took about two years to complete.

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—With assistance from Alex Longley, Kate Sullivan, Bastian Benrath-Wright, Jennifer A. Dlouhy, Shamim Adam and Sara Gharaibeh.

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