Middle East diplomacy entered a tense holding pattern this weekend, with US President Trump signalling restraint toward Iran while Israeli Prime Minister Benjamin Netanyahu openly rejected a US-backed Gaza peace framework, exposing cracks in Washington’s regional strategy just months before midterm elections.
Trump: ‘We are low-keying it’
Speaking to Axios on Sunday, Trump suggested that he is now willing to wait and see whether Iran’s worsening economic situation forces Tehran to make concessions. This is a change from just a week earlier, when Trump was reportedly close to approving another round of strikes against Iran.
Trump now appears to believe that economic pressure could achieve what military action might not. Iran’s currency has been falling sharply, while the country is also struggling to find enough money to maintain its military.
“We are only semi-negotiating with them. We are just watching Iran with its huge inflation and the fact they have no money,” Trump told Axios.
Trump pointed to oil prices being around $75 a barrel, claiming that the conflict was not causing major pain for Americans at the gas pump.
He compared the situation to a long game of chess, suggesting that such situations often work themselves out with time.
But there is still a major problem: the Strait of Hormuz has not fully reopened.
Hormuz deal gets stuck over new Iranian demands
Earlier in the week, mediators in Doha and Islamabad said a three-way understanding between the US, Iran and Oman appeared close to being completed.
The proposed arrangement would give Iran some control over traffic through the Strait of Hormuz, something Tehran had not previously been able to secure.
But the talks stalled. On Saturday, the head of Iran’s Supreme National Security Council added several new demands.
Iran is now seeking a permanent end to US involvement in Lebanon, Gaza, Yemen and Iraq. It also wants American naval forces to completely leave the region and is demanding compensation for damage caused during the war.
These are several key demands beyond simply reaching an agreement on shipping through the strait. Iran had previously raised similar demands mainly in the context of nuclear negotiations.
US officials believe the new demands could be a sign of internal disagreements within Iran rather than a single, united negotiating position.
Reformist President Masoud Pezeshkian is reportedly pushing for an agreement before Iran’s economy suffers even more. On the other side, a faction linked to IRGC commander Ahmad Vahidi is believed to be opposed to making concessions.
Despite the uncertainty, oil is still moving through the strait.
Around 8 million barrels of oil a night are reportedly passing through the southern lane, with tacit coordination from the US military.
US Vice President JD Vance said Saturday that the situation was far from over. He indicated that the US was still keeping every option on the table, including diplomatic, economic and military pressure.
Netanyahu rejects Trump’s Gaza peace plan
Netanyahu on Sunday publicly rejected the Trump administration’s 15-point Gaza peace framework. The US plan calls for Israel to gradually withdraw from Gaza as part of a process linked to Hamas giving up its weapons. The plan would eventually put Gaza under the control of a new Palestinian authority.
Netanyahu wants the order to be completely different. He says Hamas must first be fully disarmed. Only after that, he argues, should Israel consider withdrawing its forces.
Netanyahu also made it clear that Israel does not want outside governments, including Washington, telling it how to conduct its wars in Gaza, Lebanon or against Iran.
Trump’s Gaza plan faces more resistance
The Board of Peace has defended Trump’s Gaza plan despite Netanyahu’s rejection, calling it the only realistic way to prevent the crisis from repeating. The standoff puts Trump in a difficult spot as Netanyahu faces an October election and pressure from hardliners, while Trump heads toward the November midterms.
US presidents have long struggled to pressure Netanyahu, and support for Israel’s Gaza war is also weakening among Democrats, with even Vance raising doubts. Trump now has to balance reducing tensions with Iran without looking weak while continuing to support Israel. His next move on Netanyahu could also have an impact on the wider talks over the Strait of Hormuz.