727 FinanceOn Sept. 29, Iranian officials were privately pessimistic about reaching a deal with Washington ahead of the Nov. 3 U.S. midterm elections, according to people familiar with the matter. Iranian officials believe that there has been little tangible progress in the negotiations surrounding the end of hostilities and the reopening of the Strait of Hormuz, and that the likelihood of an escalation of the conflict after the midterm elections is higher. Iran remains open to a diplomatic solution, but does not believe the Trump administration will abide by the terms of the agreement, which Trump has also questioned before the election.
At the heart of the current negotiations are differences over the Strait of Hormuz and Iran's nuclear programme. The US government has informed the mediator that Iran must make a firm commitment to reopen the Strait and make concessions on its nuclear program. A U.S. official said the United States would not reach an agreement with Iran until the nuclear issue was resolved; Trump was willing to provide sanctions relief and release some of the frozen funds in exchange for Iran making concrete progress on the nuclear issue. Trump then publicly denied the reports from Axios and other media outlets, saying that he had not offered Iran a sanction exemption or conditions for unfreezing assets, and asked to withdraw the report.
Qatar is continuing its good offices around a revised version of Iran's previously proposed seven-day plan. Iranian semi-official media ISNA confirmed that Iranian Foreign Minister Araghchi had met with the good offices in New York, but the US representative did not attend. Araghchi said that Iran has communicated to the United States and the international community the conditions required to reopen the Strait of Hormuz and discussed with Qatar the plan to submit to the United States; once Qatar receives a reply from the United States, it will be transmitted to Iran through the appropriate channels. Araghchi then returned to Tehran as planned and did not stay in New York to await a response from the United States.
The memorandum of understanding signed by the US and Iran in June this year once broke down and allowed more ships to pass through the Strait of Hormuz, but the arrangement collapsed within two weeks, and traffic in the Strait is still far below pre-war levels. Iran insists that the United States must lift the naval blockade and oil sanctions if progress is to be made. Brent crude futures rose 2% to about $106.20 a barrel on Monday as expectations of a U.S.-Iran deal cooled.