US and Iran inch towards short-term deal to end fighting

The United States and Iran are edging towards a limited, temporary agreement to halt their war, sources and officials said, with a draft framework that would ⁠stop the fighting but leave the most contentious issues unresolved.

The emerging plan centres on a short-term memorandum rather than a comprehensive peace deal, underscoring deep divisions between the two sides and signalling that any agreement at this stage would be an interim step.

Hope that even a partial deal could lead to the reopening of the Strait of Hormuz have already moved markets, with global stocks approaching record highs and oil prices nursing steep losses on bets that supply disruptions could ease.

Tehran and Washington have scaled back ambitions for a sweeping settlement as differences persist, particularly over Iran's nuclear programme - including the fate of its highly enriched uranium stockpiles and how long Tehran would halt nuclear work.

Instead, they are working towards a temporary arrangement aimed at preventing a return to conflict and stabilising shipping through the strait, the sources and officials said.

"Our priority is that they announce a permanent end to war and the rest of the issues could be thrashed out once they get back to direct talks," a senior Pakistani official involved in mediation between the two sides told Reuters.

The proposed framework would unfold in three stages: formally ending the war, resolving the crisis in the Strait of Hormuz and launching a 30-day window for negotiations on a broader agreement, according to the sources and officials.

A Pakistani source and another ‌source briefed on the mediation said a one-page memorandum to formally end the conflict ⁠was close, though gaps remain between the sides.

Trump optimistic, Iran sceptical

US President Donald Trump, who has repeatedly played up the prospect of a breakthrough since the war began on 28 February with US-Israeli strikes on Iran, struck an optimistic tone.

"They want to make a deal… it's very possible," he told reporters at the White House yesterday, adding later that "it'll be over quickly".

The proposal would formally end the conflict in which full-scale warfare was paused by a ceasefire announced on 7 April. But it leaves unresolved key US demands that Iran suspend its nuclear programme and reopen the Strait of Hormuz, the sources said.

Israel, which has also been fighting Iran-backed Hezbollah in Lebanon, said it had killed a Hezbollah commander in an airstrike on Beirut a day earlier, the first Israeli attack on ‌the Lebanese capital since a ceasefire there was agreed last month.

Hezbollah triggered its latest conflict with Israel by opening fire in support of Iran on 2 March. A halt to Israeli strikes in Lebanon is another key Iranian demand in Tehran's negotiations with Washington, and Iranian officials signalled scepticism over the US proposal to end the wider war.

A foreign ministry spokesperson ⁠said Tehran would respond in due course, while politician Ebrahim Rezaei described the proposal as "more of an American wish-list than a reality".

Iran's parliament speaker Mohammad Baqer Qalibaf appeared to mock reports that indicated the two sides were close, writing on social ‌media that "Operation Trust Me Bro failed" and portraying the negotiations as US spin following its failure to reopen the strait.

Deal hopes drive oil down, shares rise

Reports of a ⁠possible agreement caused global oil ‌prices to shed roughly 11% yesterday, with benchmark Brent crude trading at around $98 a barrel today.

Global share prices also rose and bond yields fell on optimism about an end to a war that has disrupted energy supplies.

"The contents of the US-Iran peace proposals are thin, but there is an expectation in the market that further military action will not take place," said Takamasa Ikeda, a senior portfolio manager at GCI Asset Management.

Military, regional tensions

Mr Trump on Tuesday paused a two-day-old naval mission aimed at reopening the blockaded strait, citing progress in talks.

NBC News, citing two unnamed US ⁠officials, said Mr Trump decided on the pause after Saudi Arabia suspended the US military's ability to use a Saudi base for the operation.

Saudi officials were surprised and angered by Mr Trump's announcement that the US would help escort ships through the strait, leading them to ⁠tell Washington they would deny the US permission to fly military aircraft out of a Saudi base or through Saudi airspace, NBC reported.

The White House did not immediately respond to a request for comment on the report.

The US military has kept up its own blockade on Iranian ships in the region. US Central Command said forces fired at an unladen Iranian-flagged oil tanker yesterday, disabling the vessel as it attempted to sail towards an Iranian port.

Key demands left out

The source briefed on the mediation said the US negotiations were being led by Mr Trump's envoy Steve Witkoff and son-in-law Jared Kushner. If both sides agreed on the preliminary deal, that would start the clock on 30 days of detailed negotiations to reach a full agreement.

The sources said the memorandum did not mention several key demands Washington has made in the past, which Iran has rejected, such as the restrictions on Iran's missile programme and an end to its support for proxy militias ‌in the Middle East, including Hezbollah.

The sources also made no mention of Iran's existing stockpile of more than 400kg of near-weapons-grade uranium - one of Washington's central concerns.

Mojtaba Khamenei meets Iranian president

Iranian President Masoud Pezeshkian has said he had met with the country's supreme leader Mojtaba Khamenei, who has not been seen in public since his appointment in early March.

Mr Pezeshkian did not say when their meeting took place.

"What struck me most during this meeting was the vision, and the humble and sincere approach of the supreme leader of the Islamic revolution," the president said in a video broadcast by state television.

Mr Khamenei, wounded in strikes on the first day of the Middle East war that claimed the life of his father and predecessor Ali Khamenei, has released only written statements since his appointment.

His 86-year-old father was killed after more than three decades at the helm of the Islamic republic.

Ali Khamenei himself had succeeded the founder of the republic Ayatollah Ruhollah Khomeini in 1989.