US, Iran Weigh Longer Truce as Pakistan Boosts Mediation Efforts

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US, Iran Weigh Longer Truce as Pakistan Boosts Mediation Efforts.

general :: 9hrs ago :: source - bloomberg

By Patrick Sykes and Arsalan Shahla

(Bloomberg) -- Pakistan stepped up efforts to ensure the US and Iran prolong a ceasefire that’s set to end next week, allowing more time for the warring sides to negotiate a lasting peace deal.

Market expectations for a lengthening of the truce and an eventual formal end to the war have risen in the past two days, with many stock exchanges reversing their losses from the conflict and even hitting record highs.

The US and Iran are considering a two-week ceasefire extension, according to a person familiar with the matter, who asked not to be identified discussing sensitive matters. Neither side desires restarting fighting, said another person familiar with the discussions, with the war having devastated Iran’s infrastructure and sent energy prices soaring, including in the US.

Still, there are many contentious issues for the countries to resolve, including the reopening the Strait of Hormuz, Iran’s nuclear and missile programs and sanctions relief for the Islamic Republic. For now, Washington and Tehran are saying they haven’t agreed to any ceasefire that lasts beyond late Tuesday US time.

Pakistan’s army chief, Asim Munir, traveled to Iran on Wednesday as part of the nation’s intermediation, which included hosting high-level talks between US and Iranian officials last weekend. He was greeted in Tehran by Iran’s Foreign Minister Abbas Araghchi.

A key priority is reopening the strategic Hormuz strait, where tensions remain high as the US continues a blockade, started on Monday, of vessels bound for and from Iran. US President Donald Trump announced the move after the talks in Pakistan’s capital of Islamabad ended without a deal. The waterway has effectively been close since the war erupted with US and Israeli attacks on Iran in late February.

The MSCI All Country World Index — the broadest measure of global shares — rose as much as 0.3% to a record and was headed for a 10th day of gains on Thursday, the longest winning streak since September. Asian shares rose 1.3%, nearly erasing their war-driven losses, while global crude benchmark Brent held around $95 a barrel, well below last month’s peak of nearly $120.

Fighting between the US and Iran has been on hold since April 7 US time.

The White House hasn’t “formally requested an extension of the ceasefire,” Press Secretary Karoline Leavitt told reporters Wednesday. But she acknowledged “we remain very much engaged in these negotiations,” adding that Pakistan is the sole mediator.

The US is sending thousands of additional troops to the Middle East in the coming days to pressure Tehran into making a deal, the Washington Post reported, citing officials it didn’t name. The forces include about 6,000 troops on the aircraft carrier USS George H.W. Bush and in its strike force.

Iran sees a prolonging of the US blockade as “a prelude to a breach of the ceasefire,” said Ali Abdollahi, the commander of Iran’s joint military headquarters, according to state TV. Iran’s armed forces “will not permit any exports or imports to continue in the Persian Gulf, the Sea of Oman or the Red Sea” if the blockade continues, he said.

While Israel joined the US in halting attacks on Iran last week, its military has kept up the campaign against Tehran-backed Hezbollah in Lebanon, complicating the broader push for peace.

Prime Minister Benjamin Netanyahu said he told the Israeli military, which invaded Lebanon last month, to expand the buffer zone it’s seeking to establish inside the country.

Negotiations are taking place about a potential ceasefire, Israel’s state-owned Kan News reported Wednesday, citing an unnamed official, who added no decision has been made.

The leaders of Israel and Lebanon will hold talks later this week, Trump said in a post on social media. “It has been a long time since the two leaders have spoken, like 34 years,” he said, without giving details on the format of the discussions.

Talks between Israel and the government in Beirut, which has little sway over Hezbollah, took place on Tuesday in Washington. That conflict has killed more than 2,000 people and displaced a million, according to Lebanese authorities.

Those negotiations aren’t linked to the US-Iran talks, according to a senior American official. The US wants a durable peace in Lebanon but did not demand an immediate ceasefire, the official said.

Even so, any end to the war in Lebanon could ease tensions between the US and Iran, which sees Hezbollah as a crucial ally.

Trump has vacillated between declaring the conflict with Iran nearly won and threatening escalation, while questions remain about the issues that drove the US and Israel to launch the latest bombardment — chief among them concerns over Iran’s nuclear program.

The whereabouts of Iran’s uranium have been unknown since the US and Israel bombed the country’s nuclear facilities in June last year, and International Atomic Energy Agency inspectors have been barred access since then.

Iran has said it isn’t pursuing a weapons program. The country’s right to peaceful use of nuclear energy “cannot be revoked,” Foreign Ministry Spokesman Esmail Baghaei said Wednesday. However, the level and type of enrichment are “negotiable,” he added.

Even with a deal, restoring Gulf energy flows may take time, adding to fears of global inflation. There are also concerns about disruptions to other supplies, particularly fertilizer, where shortages could hurt food output and raise prices.

The United Nations is ready to set up a corridor to move fertilizer through Hormuz in time for planting, though it hinges on a political agreement, according to a top UN official.

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