Recent Items

Iran War: Iran Snubs US, Walks Out of Direct Talks Due to Trump Threats; Israel Still Refusing to Exit Lebanon; Strait of Hormuz Transits Expected to Stay Low Due to Scrapping

Posted on by

[Today’s post launched well before complete because information pollution plus unexpected demand requiring me to go out, not a crisis but the sort that takes time and money. Please return at 8:30 AM EDT for a final version]

The “deal” is faltering despite the fact that the US and world urgently need shipping in the Strait of Hormuz to return to an approximation of the old normal to have any hope of preventing a deep recession, even global depression. Trump made clear he was cognizant of that risk when he justified the very-much-and-correctly-Iran-favoring Memorandum of Understanding (MOU) by saying he did not want to be a second Herbert Hoover and oil inventories would hit critically low levels in about four weeks.

Yet despite that, Trump has continued to work against his own interests by including Jared Kushner and Steve Witkoff, personally loathed by the Iranians, as prominent members of the negotiating team.1 Hegseth threatened Iran immediately after the signing of the MOU, a violation of its first clause. But it was Trump himself who triggered the walk-out by Iranian negotiators.

And:

Earlier from Trump:

In the end, the talks continued, but not directly but through the Qatar and Pakistan intermediaries. And after again closing the Strait of Hormuz, Iran has reopened it. But how many insurers and vessel operators will be willing to commit to sending a ship into the Gulf to pick up a fresh cargo when the status of the Strait of Hormuz is still in play? As much as the fate of Lebanon is very important to Iran, and may serve as the vehicle for slow-motion regime change in Israel, the world is on the receiving of what happens in the Strait of Hormuz

In the other “not good signs” category, the talks as originally scheduled to start last Friday, were planned to run three days. This one did go for 12 but that is still short of what was previously seen as desirable. Admittedly, even though the chief US and Iran negotiators have left Geneva, technical teams are staying to try to achieve further progress. However, as we will soon discuss, Israel is still refusing to comply with the first paragraph of the MOU, that of vacating Lebanon, and the US does not appear to be taking measures it could use to force cooperation. In addition, there is other fog of information in play, such as Iran Foreign Minister Abbas Araghchi saying the US has removed sanctions on Iranian oil when in fact OFAC has not done so.

Trump in particular and many of the US pundit class are in the state I heard described as “They have changed their minds, but they have not changed their hearts.” And with Trump being fabulously emotional, his lack of internal acceptance is more than enough to wreck what was already set to be a difficult process.

Nevertheless the negotiators are putting happy faces on the fact that they got somewhere. For instance, from Bloomberg:

From the article proper:

  • Iran said there had been “major progress” in all-night discussions with the US as the warring sides try to reach a peace deal within two months.
  • Iranian Foreign Minister Abbas Araghchi said the mediators, Qatar and Pakistan, had managed to ease some of the tensions over Lebanon, and Iran was beginning to see financial benefits from last week’s memorandum of understanding.
  • Negotiations are set to continue throughout this week, with lower-level delegates discussing technical matters, and a resolution to the fighting in Lebanon will be decisive for the success of the US-Iran talks.

Forgive me, but “ease some of the tensions over Lebanon” sounds like a desperate effort to conflate exchanges of ideas with action.

More from that article:

Iran said there had been “major progress” in all-night discussions with the US, as the warring sides try to reach a peace deal within two months.

The countries began technical talks in the Swiss resort of Bürgenstock over the weekend, following their interim agreement last week that led to a ceasefire extension and Iran reopening the Strait of Hormuz.

Plenty of obstacles remain, however, including Israel’s war in Lebanon against Hezbollah, an Iran-backed militant group. At one stage on Sunday, Iran said it would suspend talks — but never actually did — after US President Donald Trump threatened military action against the Islamic Republic over its funding of proxy groups in the Middle East.

On Monday morning, Iranian Foreign Minister Abbas Araghchi said the mediators, Qatar and Pakistan, had managed to ease some of the tensions over Lebanon. He added Iran was beginning to see financial benefits from last week’s memorandum of understanding, including waivers of US sanctions on its oil exports and assets in countries such as Qatar being unfrozen.

As we will show below, the oil sanctions have not been waived.

As an aside, one of my big peeves about these negotiations is that the participants (ex the US side, which is in recidivist jerkdom mode) too often adopts old norms of diplomacy, which is to engage in extreme candy-coating.2 Lavrov and more recently Chinese diplomats, particularly Wang Yi, have been deviating considerable from those no doubt strong habits and are often refreshingly blunt, as a response to persistent bad faith behavior by the US. Sadly it seems only superpowers can regularly adopt this mode of discourse.

But the new norms of occasional Foreign Ministry candor (also observed from time to time on Israel’s genocide) means it is even more likely that the press, particularly the financial press, which does not regularly follow diplomatic negotiations intently, read more into official statements than is really there.

A further issue is that what the Pakistani negotiators say cannot be taken at face value. They have now twice, and highly visibly, been caught out over their skis, first in taking up the false Trump claim that the MOU was to be signed in 24 hours, as in on or right before Trump’s birthday. Now see:

More sanity-checking came in a interview of former negotiator David Pyne with Mario Nawfal:

From Pyne in a lightly-cleaned up machine transcript:

I’ll just give you my my notion of when negotiations succeed and when they don’t.

They succeed in being serious when in fact four conditions are in place.

Number one, you have two parties who are really serious about getting something done.

Number two, when the two parties have a shared sense of urgency that is to an urgency is defined by how much pain a party is under and what is the perspective perspective gain. That’s the second element shared sense of urgency. In short, they either both in a hurry or they’re both not in a hurry.

Number three is effective mediation and number four is an end product which would allow both sides to walk away legitimately believing that they had got something significant.

If you ask me whether any of these four elements are in place, I would say it’s highly doubtful.

That’s point number one.

Number two, I’m reminded of a phrase attributed to the Taliban, but I think it goes back farther than that.

You have the clock, but we have the time.

You have the clock, but we have the time. And frankly looking at this in relation to the memorandum of understanding, three things have happened in the real world as a consequence of what was agreed to last Wednesday. Number one, the naval blockade is either being eased or eliminated on Iranian po ports.

Number two, the administration has unsanctioned significant amounts of Iranian oil and hydrocarbons.
That’s the second thing. And the third, the military strikes conducted by the United States and Israel against Iran proper and Iranian strikes against Israel and the Gulf have stopped.

All three of those deliverables favor Iran.

And forgetting those three things, the Iranians have made not a single concession pertaining to what we we thought was the main purpose of the war. Constraining, restraining, ending, whatever you want to characterize it, Iran’s nuclear program. So my sense is the Iranians are not in a hurry.

Certainly not as as much in a hurry as the president. Now I’ve emitted a fourth piece of theou because it is not yet implemented and that is opening the straits. And that is the single greatest vulnerability that the administration has and that the Iranians do not have.

It is the single greatest embarrassment to the administration that instead of 130 tankers getting through, you had today, I think yesterday, day before, 25 got through, which was the largest number in recent weeks. That number today has been cut in half, if that.

And the Iranians say they’re closed.

That’s all they need to do to create uncertainty and indecision on the part of insurance companies and shipping companies. So my sense is and I have no idea what the last tick tock has been from Switzerland. The Iranians said they were going to walk out. They were insulted by the president’s uh social media post. They’re back on. They’re off. They’re back on. They’re off. I mean this is so built in to the dynamic that if you want to follow this hour by hour making a big mistake.

Confirming Pyne’s and our take:

While we are on the subject of the status of Strait of Hormuz transits:

The last two day’s lead stories in Lloyd’s List show the degree of ship owner worries. First from yesterday,
Tentative Strait of Hormuz transits continue despite Iranian closure and toll threats:

  • US could charge tolls on Strait of Hormuz for ‘Guardian Angel’ service, threatens Trump in response to Iran’s insurance-and-toll scheme
  • Multiple vessels alter course or abort transits amid Strait of Hormuz uncertainty, underscoring the immediate operational impact of Iran’s closure announcement and routing demands
  • The strait remains a high-risk zone, with war risk premiums, operational delays and diplomatic uncertainty expected to persist as US-Iran ceasefire talks proceed amid escalating maritime tensions

And today: US-Iran talks show progress, but shipping fears another ‘Groundhog Day’:

  • Chinese shipping stocks surged again on Monday after mediators Qatar and Pakistan reported ‘encouraging progress’ in US-Iran talks toward a final deal
  • Industry observers remain deeply sceptical, with Sea-Intelligence likening the talks to ‘Groundhog Day’ and Xeneta warning that the recovery of MEG box shipping services will stretch into mid-September, even in a best-case scenario
  • Unresolved questions are being flagged over war risk premiums, strait toll enforcement, congressional approval of sanctions relief and a 30-day minesweeping window that must close before safe transit can resume

More confirmation that shipper hesitation is well warranted:

Both for substantive reasons and to illustrate the difficulty of trying to nail down the state of play:

In keeping, see this fresh summary from the Cradle, based on the remarks of Central Bank Governor Abdolnaser Hemmati, is more accurate in saying that the MOU called for waivers on oil exports from OFAC but did not say where that stood:

Iran says progress made on unfreezing assets, easing oil export restrictions after Switzerland talks
——
Tasnim News Agency reported on Monday that Iran secured progress on the release of blocked financial assets and the reduction of sanctions-related costs on oil exports following the latest round of indirect negotiations in Switzerland.

Speaking to Tasnim, Central Bank Governor Abdolnaser Hemmati said the discussions, held within the framework of a 14-point agreement, were “intense and difficult” but ultimately advanced in line with the objectives set by the Iranian delegation.

Hemmati added that significant headway had been made on the issue of frozen Central Bank funds, noting that memorandums required under the Doha agreement had been signed and that the gradual utilization of the resources would begin in the coming days in accordance with conditions set by the Central Bank.

On the issue of oil and petrochemical exports, Hemmati told Tasnim that Clause 11 of the Iran-US memorandum called for the issuance of a waiver, which is set to be implemented by the US Treasury’s Office of Foreign Assets Control (OFAC). While stressing that Iranian oil exports had continued despite sanctions, he said the new arrangement would eliminate the additional costs imposed by restrictive measures.

Aljazeera’s live feed confirms that Israel is refusing to accept the MOU demand of withdrawing from Israel. One header from its live feed after the top negotiators left Geneva:

Israel won’t pull back from Lebanon ‘security zone’: Foreign Minister Saar

This is consistent with the Netanyahu’s position, per the Times of Israel, Netanyahu vows to maintain IDF presence in Lebanon even as issue rocks US-Iran talks:

Hezbollah chief rejects security zone as ‘impossible’ as Iran says deployment violates MOU; Israel said to mull ‘small withdrawal’ if US requests, though not past Yellow Line

Prime Minister Benjamin Netanyahu on Sunday vowed to keep Israeli troops in the south Lebanon security zone “for as long as necessary” to protect northern Israel from Hezbollah, as the issue threatened to derail talks between the US and Iran, which began in Switzerland earlier in the day.

Israel and Hezbollah traded heavy fire over the weekend, killing several IDF soldiers and dozens of Lebanese, though the fighting halted midday Saturday after Israel’s political leadership instructed the IDF to “hold its fire,” reportedly under heavy pressure from the US, which feared the collapse of the Iran talks.

Israel did behave briefly…..but how long will that last? Recall that Israel tries the stunt of advancing further into Lebanon, increasing its violation of Lebanese sovereignity, and then when Hezbollah shoots to try to force the IDF back, Israel plays victim when they yet again were the aggressor.

An earlier entry in Aljazeers’s live feed questioned whether US and Iran attempt at a finesse could get off the ground:

More questions than answers on Lebanon after US-Iran ‘de-confliction cell’ announcement

Authorities have announced a “de-confliction cell” to be put in place, which seems to be a good first step towards some permanent peace. But we’re not quite sure exactly what it means.

Presumably, it means some sort of disengagement between Hezbollah and Israeli forces and maybe the establishment of a demilitarised zone to separate the two sides. But, as always, because we’re so short on details, we have more questions than answers.

This is an agreement that has been reached between Iran and the US, but there’s no question of Hezbollah and Israel accepting it, presumably given the fact that the two senior partners have both agreed to this. The junior partners will be brought round, but there are going to have to be compromises on both sides.

For Israel, this is very difficult. They have said they’re not going to withdraw from Lebanon. For Prime Minister Netanyahu, this causes all sorts of political problems at home. He has many hardliners in his own government calling for the Litani River, for example – further north in Lebanon – becoming the new de facto border with the country.

So, it’s going to be difficult to get any kind of withdrawal of Israeli soldiers that was agreed in the memorandum of understanding between Iran and the US.

Then, there are all sorts of questions about who administers this and makes sure that both sides agree to uphold this so-called deconfliction cell in the south.

One issue we have skipped over but that will come into play if the Trump Administration develops some spine and forces an Israel retreat back to Israel is where that actually is. Chas Freeman has discussed at length Israel’s refusal to settle on its borders as part of its relentless expansionist agenda. So where the Israel/Lebanon border lies is a subject of dispute.

Aljazeera also reported:

Gaza situation worsens as Israeli troops advance, disease spreads

While the world’s attention is on Iran-US negotiations, the humanitarian situation in Gaza remains catastrophic. Here are the developments from the latest UN report:

  • The number of reported casualties since a “ceasefire” took hold in October 2025 has reached 1,005 fatalities and 3,157 injuries.
  • Israeli troops advanced towards populated areas of Gaza City, forcing dozens of families to abandon their homes.
  • Fuel shortages continue to significantly hinder the humanitarian response with aid groups “forced to collectively prioritise fuel allocations to life-saving services and suspend them for non-critical ones”.
  • Pest and rodent infestations remain a serious concern with rising temperatures, overcrowded displacement sites, and lack of safe drinking water causing disease to increase.Interactive - Death toll tracker-gaza - June 5, 2026-1771426868

Gaza situation worsens as Israeli troops advance, disease spreads

And for some schadenfraude that is also informative about these negotiation dynamics:

I am stopping here because this is an overly dynamic situation. Now that it is the start of the day Monday in the US, one can expect both extreme spin-doctoring and US repudiation of initial settlement of issues in Geneva, as is starting awfully early in the day:

Stay tuned. Unless things go weirdly quiet, see you tomorrow!

This development at Qatar’s LNG operations is not helpful to the energy picture but at this point does look to be an accident:

_____

1 The Iranians got some digs in:

2 A college here trained diplomats in the use of diplomatic language. One example he often use:

“Your proposal is being studied” = Fuggedabodit

“We are studying your proposal” = It is getting a look

“I am studying your proposal” = Keen interest

Print Friendly, PDF & Email

Subscribe to Post Comments
7 comments

  2. LeMon3

    Re: the Qatar Ras Laffan LNG explosion

    My feed has had guys warning for months that restarting processing and mining plants is a truckload more difficult than turning on a light or starting a car.

    Those poor bastards at Ras Laffan were, presumably, the guys who knew what they were doing.

    Where to now for Qatari gas, fert and He? Where to for those that depend on those outputs?

    Reply ↓
  3. The Rev Kev

    I suppose that Trump has fallen back on his usual way of dealing with insoluble problems – delay, delay and delay while hoping that something turns up that will deal him some good cards. Problem is that as he does this, things like diesel run down more and more and by the time he actually makes a decision, it is too late. The crisis will be here and then it will be all emergency orders and restrictions. But I am sure that there are people in his regime planning on not letting this crisis go to waste.

    Reply ↓
    1. Amateur Socialist

      Israel will withdraw from Lebanon only when US/UN boots on the ground force them out. No I don’t see that as likely either.

      Reply ↓
  5. Acacia

    Last week, Trump said there are only four weeks of oil left to draw from the SPR which, if true, means the situation will become critical in the second half of July.

    Iran is now saying the Zionists must fully withdraw the IDF from Lebanon, so either Iran backs down on this demand or else Israel complies, but it’s hard to see either of these two things happening. As long as Iran doesn’t back down, though, whether or not the US can compel Israel to back down seems irrelevant.

    Since Iran holds all the cards on SOH, letting negotiations trundle forward and repeatedly collapse due to US/Israeli intransigence and/or perfidy doesn’t matter, because the oil cliff just keeps getting closer.

    In fact, it is in Iran’s interest to let this happen.

    Reply ↓

Leave a Reply

Your email address will not be published. Required fields are marked *