Trump, Qatari emir speak as officials tout progress towards deal

[WASHINGTON] The prospect of an interim deal focused on the Strait of Hormuz appeared to be gaining traction on Tuesday (Aug 4), with Qatar saying a proposal had been drafted and both American and Iranian officials sounding hopeful about an agreement to reopen the crucial waterway.

US President Donald Trump discussed efforts to de-escalate US-Iran tensions with Qatar’s emir Sheikh Tamim Bin Hamad Al-Thani in a call on Tuesday, according to the Gulf state’s government.

A White House official confirmed the call, but did not offer additional details.

Oil reversed earlier gains, and US government bonds rallied, on optimism that mediators will be able to broker a deal and avoid a new wave of American airstrikes.

Brent crude plunged for the second straight day on the increased likelihood that the vital Strait of Hormuz may see flows pick up again.

Prices ended the session down more than 5 per cent, settling below US$80 a barrel for the first time in more than three weeks.

A short-term deal could help normalise commercial shipping in the strait – a crucial conduit for global energy supplies – and prevent the resumption of fighting in the Middle East.

But even if such an agreement is reached, it might still fail to end the war conclusively or resolve Trump’s concerns about Iran’s nuclear program.

The previous ceasefire pact between the US and Iran lasted less than a month before it collapsed over disagreements over control of Hormuz, raising the prospect that US military strikes and Iranian retaliation could begin anew if any new agreement unravels. 

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In a potential climb-down that could form part of a potential deal, Iran is considering allowing European nations to remove mines from the Strait of Hormuz, according to diplomats familiar with the matter, who spoke on condition of anonymity to discuss sensitive information.

That is contrary to Iran’s public stance, but in private meetings in recent weeks Teheran has softened its position. Iran’s foreign ministry did not immediately respond to a request for comment.

Both US Secretary of State Marco Rubio and Treasury Secretary Scott Bessent separately gave optimistic assessments of the talks regarding Hormuz.

“I think the immediate deal, the one that you see a lot of focus on, is the straits,” Rubio told reporters, of ongoing efforts to get more ships moving through the key waterway. 

Bessent also suggested a deal on the chokepoint could come soon. 

“We’re in talks with the Iranians and I think there is a chance we may have a deal today or tomorrow to open the strait,” Bessent said to CNBC on Tuesday.

Asked whether there would be a toll on maritime traffic, he added: “I think it would be freedom of movement.”

Bessent’s comments came after the foreign ministry of Qatar, one of the main mediators between Washington and Teheran, said a proposed de-escalation resolution was “being circulated between the parties”.

Iran’s state-run IRIB News cited the country’s foreign ministry spokesman Esmail Baghaei as saying the talks between Iran and Oman had been positive.

He said ongoing discussions were focused on “defining safe outbound and inbound routes for vessels”.

But both Qatar and US officials have cautioned there is no agreement yet. Throughout the conflict, US officials have repeatedly said a deal to open Hormuz was close, with nothing materialising.

A Qatari spokesman said he could not provide a timeline for a pact and that the focus is on finding a short-term resolution to avoid a further confrontation.

It is unclear if Qatar was referring to negotiations between Iran and Oman to get more ships sailing through the Strait of Hormuz.

Tensions have ramped up in recent days, with Trump saying he was giving Iran a final chance to reach a deal. Over the weekend, he held off on attacks that he said would have been the largest since World War II.  

“I want to give them every last chance before decapitation,” Trump told reporters on Monday. “You’ll find out today or tomorrow. I mean, they’re going to go quickly, one way or the other. It’s not very complex.”

A potential diplomatic resolution appears to hinge on the talks between Oman and Iran. Iran continues to take a hard line. The country insists it has the right to manage maritime traffic and stop vessels that try to sail through the chokepoint without its permission.

Iran’s stance underscores the difficulty Trump has faced in wrapping up a war he started in late February. The conflict has sent energy prices soaring, hurting the US leader and his Republican Party ahead of midterm elections in November.

The Islamic Republic has vowed to retaliate fiercely against any big US-Israeli strikes. Throughout the conflict, it has caused significant damage to Gulf Arab states such as Kuwait, Bahrain, Saudi Arabia and the United Arab Emirates with one-way attack drones and ballistic missiles.

Escalation conundrum as tensions flare

The Trump administration has also faced questions over US weapons stockpiles amid worries those have been depleted by the months-long war.

The US Army has used up most of its stockpile of long-range precision missiles, according to a report from Reuters. 

Administration officials have repeatedly said they have sufficient stockpiles to carry out their military objectives.

Trump, in a statement Tuesday, said the US had “far more munitions than anyone in the world” and that defence companies were ramping up production as well.

“As we build up, we will start issuing more to our allies in Europe and elsewhere,” he added.

Trump has regularly backed down from threats to launch massive attacks on Iran. If he opts for them this time, that would likely push out oil prices further.

A senior Iranian official called on the US to “take the first step and change its behaviour” by returning to the terms of an interim peace deal the sides reached in June. BLOOMBERG