US and Iran clash near Hormuz as talks go 'back and forth'

U.S. and Iranian forces clashed near the Strait of Hormuz overnight, highlighting the tension between the two sides even as they tout progress toward an interim peace deal.

The exchange of strikes came hours after U.S. President Donald Trump said negotiations with Tehran to extend their ceasefire and reopen the strait are proceeding, though Secretary of State Marco Rubio added Tuesday that a deal would likely take a few days to finalize.

One contentious issue under discussion is Iran’s $24 billion in frozen assets, with Tehran wanting half that amount released upon the signing of an agreement, the semi-official Tasnim news agency reported. That element is particularly controversial among Iran hawks in the U.S., who are concerned about conceding too much to the Islamic Republic.

The U.S. military said it conducted self-defense strikes in southern Iran on Monday night, targeting missile-launch sites and boats attempting to lay mines, while the Islamic Revolutionary Guard Corps 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 wasn’t part of the U.S. operation.

Iran’s Foreign Ministry condemned the U.S. attacks as a violation of a ceasefire that’s been in place since early April, while 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 supreme leader, who hasn’t been seen in public since succeeding his slain father in March, didn’t suggest there were new stumbling blocks in the talks.

There’s “a lot of talking back and forth” about “specific language in the initial document,” Rubio told reporters in India.

Rubio said Trump would either agree to a good deal or make no deal at all. The president is under pressure from the likes of Republican Sen. Lindsey Graham, who wants a blockade of Iranian ports to remain in place and more strikes to further weaken the Islamic Republic’s military.

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

Brent crude rose 2.9% to just below $100 a barrel on Tuesday, though it’s still down this week on signs an interim deal is closer.

Arab states including Saudi Arabia, the United Arab Emirates and Qatar have urged 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 Monday, Trump, in a Truth Social post, urged Saudi Arabia, Qatar and other countries to join the Abraham Accords and recognize Israel. That appears unlikely unless Israel takes steps toward allowing a Palestinian state, which its government has ruled out.

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

Trump also wants Iran to commit to handing over or destroying its stocks of highly-enriched uranium, which the U.S. fears could be used to build an atomic bomb. Iran has publicly rejected that, though it’s also signaled 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 Monday, 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 traveled to Doha for consultations with senior Qatari officials on Monday. 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 program. The war could still restart if those were to break down.

“Even if the two sides are able to reach a deal — and that’s already a big ‘if’ — there is little hope they can then reach a stable peace,” said Dina Esfandiary, an analyst at Bloomberg Economics.

Here’s more on the Iran war:

•A little-known Swiss trading company called Lytton SA played a key role in the transit through the Strait of Hormuz of an oil supertanker whose stop-start journey captivated the energy market earlier this month, according to people familiar with the matter.

•Iran’s government could soon roll back some restrictions on a months-long digital blackout that has cut off millions of its citizens from the internet.

•Abu Dhabi National Oil Co. has been quietly ferrying oil and gas shipments out of the Persian Gulf using its own fleet, apparently clearing both the Iranian navy and U.S. warships to reach energy-starved customers.