Nearly four weeks ahead of Iran and its allies’ two-man summit in Teheran, the US and Iranian negotiators in New York are working on a potential phased solution to the nearly seven-month conflict, preliminary talks focussed on reopening the Strait of Hormuz and easing the US economic blockade of Iran.
Water, which is strategically important has become one of the key points in negotiations. Tehran is finally hoping for any relief from economic sanctions which have added to the weight on Tehran’s economy; Washington, meanwhile, is keen on reinstating trade along this key worldwide oil conduit.
Sources close to the negotiations told us that neither party wants to lose their leverage until they obtain assurances from the other party. Iranian government officials have, however, admitted to the economic toll of the conflict policy.
Hormuz Emerges As Key Bargaining Point
A way out of the current impasse may come from a staged process, a senior Iranian official reported. Within this arrangement, Iran may be given permission to pass through the Strait of Hormuz and/or the US blockade of the Strait may be eased or even removed, potentially providing Tehran access to seized funds.
Iran has said it may resume the waterway flow in 7 days, if America removes its military pressure and lifts the blockade on its ports. In negotiations to come up with the solution, Tehran has put out that offer via mediators earlier this month.
The Strait of Hormuz, which is one of the world’s main energy chokepoints, will be crucial to the reopening not only for the US and Iran, but for global oil markets.
Negotiations Continue Amid Economic Pressure
The new talks come on the heels of a renewed dialogue between Washington and Tehran during the UN General Assembly. Between the United States and Iran, discussions have taken place between the two linked by mediators to see what terms can be agreed on to end the conflict.
Economic impacts of the clash are also carefully being observed. Oil prices have been fluctuating due to the uncertainty over the prospect of a truce, plus the ongoing attacks and threats to energy assets in the region. Uncertainties about the conflict kept pressuring prices on Friday, as Reuters reported that Brent crude was staying above 100 USD per barrel.
The central question will be sequencing, and for now it’s the one thing that two sides are seeking from the other side before they lose their leverage from the negotiation. That deadlock may be addressed with the proposed ‘phased plan’, but there is no official confirmation at this time of the final deal.