The state of progress in the Iran-US negotiations has become difficult to understand. Public comments by both parties are part of negotiating tactics.
Trump and his associates are using announcements to play the stock market. Monday’s presidential announcement of “productive talks” was preceded, in the 15 minutes prior, with 10x the average trading volume in oil futures relative to the preceding week.
Iran, for its part, makes heavily ideological statements intended to firm up its credibility with other “resistance” partners. It is also, like the White House, using TikToks and Reels, some very hard-hitting.
Amidst these signals, Iranian-Swedish analyst Trita Parsi has proved one of the most genuine analysts. What is Iran’s position and what are its goals, according to Parsi?
Parsi argues that while Iran has tremendous leverage, it does want a deal in the medium-term. That is because it sees June-August as an opportune window to “cash its chips”.
Both Trump and Netanyahu are under pressure with elections approaching in October and November. Netanyahu is more constrained than usual, because of Trump’s popularity in Israel. And in the US, an electoral defeat in November would prevent Trump from delivering on any deal that might have been agreed.
So Iran has short-term leverage, but a time limit to cash it in.
The “cash” Iran wants for its “chips” is, firstly, literal cash: some USD $100 billion in frozen assets held overseas. Then there is sanctions relief, which would allow Iran to sell its oil on global markets and access finance through the Western banking system.
There is also an Iranian claim for a “shipping management fee” on oil passing through the Straits of Hormuz. Some tankers have already paid this in order to get out.
These Iranian wins in themselves would be a tremendously bitter pill for the White House. But most consequentially, Parsi argues Iran will not accept a peace deal that does not also restrain Israel in Gaza and Lebanon.
Iran wants to use over the world economy to strengthen itself in the long-term. Yet Israel sees any deal that leads to a strengthened Iran as a threat. And with Iran’s insistence on a regional ceasefire, Israel can essentially veto any deal by attacking Lebanon.
This is precisely what Israel has been doing this week in response to Trump’s share-market buffering announcement on Monday. Its soldiers have crossed the “yellow line” marking the demilitarised zone it itself declared in southern Lebanon, presumably with another annexation in its long-term sights.
Iran responded to the bombing by firing missiles at Kuwait. Parsi argues that if Israel resumes attacks on Lebanon further down the line, Iran will hit Dubai or elsewhere in the UAE.
So there remain fundamental differences and obstacles to a sustainable deal. Meanwhile, if the straits remain closed, oil supplies will be critically low by mid-June.
My prediction is that Iran will take the global oil price to crisis point before trying to settle with the US. Indeed, Iran stated on Saturday that it has no concessions to offer on the nuclear issue.
This could mean hitting oil-price crisis point in mid-June, then an opening of the straits in late June or early July, following a memorandum of understanding.
The actual normalisation of shipping volumes would remain vulnerable to flare-ups between Israel-Lebanon and Iran-UAE. But by August, there will have been tremendous pressure on both sides to accept whatever the other side can give.
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