US and Iran clash near Hormuz even as both tout talks progress

• US and Iranian forces clashed near the Strait of Hormuz despite ongoing peace talks for a ceasefire extension, highlighting regional tensions. Both sides claimed defensive actions.
• Ongoing US-Iran negotiations face major obstacles including unfreezing funds, Strait of Hormuz passage, Iran's uranium stocks, and Lebanon ceasefire terms.
• President Trump balances pressure from US hawks for more strikes against public war fatigue and rising global energy prices. Arab states urge diplomacy.

WASHINGTON/DOHA – US and Iranian forces clashed near the Strait of Hormuz on May 25, highlighting the tension between the two sides even as they tout progress toward an interim peace deal.

The strikes came hours after US President Donald Trump reiterated that negotiations with Tehran to extend their ceasefire and reopen the strait were proceeding, and just before Iran’s Supreme Leader Mojtaba Khamenei published a statement warning that the “nations and lands of the region will no longer be a shield for American bases”.

The 56-year-old Mr Khamenei, who has not been seen in public since his appointment in March, did not suggest there were new stumbling blocks in the talks or criticise the United States for the clashes late on May 25.

But the exchange underscored the confusion that has characterised the talks since a ceasefire was struck early in April.

There’s “a lot of talking back and forth” about “specific language in the initial document, so it’ll take a few days,” US Secretary of State Marco Rubio told reporters in India on May 26.

The US military said it conducted self-defence strikes in southern Iran, targeting missile-launch sites and boats attempting to lay mines, while the Islamic Revolutionary Guard Corps (IGRC) said it fired at an F-35 fighter jet and several drones after they entered Iranian airspace.

The IRGC claimed it shot down an unmanned MQ-9 Reaper drone and forced the other aircraft to flee.

Several Iranian personnel were killed in the attacks on vessels near Larak island in the Strait of Hormuz, Iran’s state-run Nour News reported, without providing further details. Israel’s military said it was not part of the US operation.

Mr Rubio said Mr Trump would either agree to a good deal or make no deal at all.

The president is under pressure from Iran hawks in the US, including Republican Senator Lindsey Graham. They are concerned the emerging deal, which may see the US unfreeze billions of dollars of Iranian funds and lift a blockade of Iranian ports, concedes too much, and they want more strikes to further weaken Iran’s military.

Mr Trump has to balance those pressures with the increasing unpopularity among Americans of the war, which began with a US-Israeli bombardment of Iran in late February. The conflict, and Iran’s effective closure of Hormuz, have caused energy prices to soar and are pushing up inflation globally.

Brent crude rose 3.8 per cent to just below US$100 (S$128) a barrel on May 26, though it is still down this week on signs an interim deal is closer.

Arab states, including Saudi Arabia, the United Arab Emirates and Qatar, have urged Mr Trump to continue with diplomacy.

They fear a return to hostilities would cause Iran to revert to firing drones and missiles on their countries, as it did before the April truce, causing tens of billions of dollars of damage and killing scores of people.

On May 25, Mr Trump, in a Truth Social post, urged Saudi Arabia, Qatar and other countries to join the Abraham Accords and recognise Israel. That appears unlikely unless Israel takes steps toward allowing a Palestinian state, which its government has ruled out.

Unresolved issues

Beyond the frozen funds, other obstacles to a US-Iran pact include whether Tehran will allow ships free passage through the Strait of Hormuz. The US, Arab states and Europe say it must, but Iranian officials say they want to charge fees for navigation services.

Mr Trump also wants Iran to commit to handing over or destroying its stocks of highly-enriched uranium, which the US fears could be used to build an atomic bomb.

Iran has publicly rejected that, though it has also signalled it may send the stocks to a third country, with Russia and China being the most likely candidates.

Lebanon, where Israel is fighting Iran-backed Hezbollah militants, is another sticking point. Iran insists on a ceasefire there too, while Israel has said it must be allowed freedom of action.

Late on May 25, Prime Minister Benjamin Netanyahu said Israel will intensify strikes on Lebanon, where its invasion has killed thousands of people and displaced more than a million.

An Iranian delegation headed by Parliament Speaker Mohammad Bagher Ghalibaf travelled to Doha, in Qatar, for consultations with senior Qatari officials on May 25. The Iranian central bank governor, Abdolnaser Hemmati, was part of the group and was set to discuss the release of frozen Iranian funds, the Fars news agency reported.

Even if the sides can reach an interim agreement, which will probably see the ceasefire extended by around two months, they would then need to go into complicated negotiations over Iran’s nuclear programme.

The war could still restart if those were to break down. BLOOMBERG