US and Iran stuck in standoff as oil prices soar to wartime high

The U.S. and Iran showed little sign of breaking their impasse and agreeing to another round of peace talks, with President Donald Trump insisting that his navy’s blockade is working.

Trump told Axios the blockade of Iran’s ports is “somewhat more effective than the bombing” and “choking” the country by restricting its oil exports.

At the same time, U.S. military commanders are set to brief Trump on new plans for Iran, Axios reported, citing unnamed sources. Centcom, which oversees U.S. forces in the Middle East, has prepared a plan for a short wave of strikes on Iran to break the negotiating deadlock, Axios said.

Brent oil rose to a wartime high as traders factor in an even longer closure of the Strait of Hormuz and a potential breakdown of the U.S. and Iran’s shaky ceasefire, which has been in place since around April 7. Brent surged as much as 7.1% to more than $126 a barrel on Thursday, before paring gains to $121.40.

“Trump wants to end the Iran war, but not on the terms proposed by Tehran,” said Becca Wasser and Chris Kennedy, analysts at Bloomberg Economics. “That suggests the question is no longer whether he escalates to push for a better offer, but when and how. We think the most likely window for action is within the next two weeks, and that renewed U.S. strikes are the most likely course.”

Iran has said it won’t reopen the strait to commercial vessels until the U.S. lifts its blockade. It’s unclear how long Iran has left before it runs out of oil storage and is forced to cut production.

Signs of strain on the Iranian economy have emerged in recent days, with the currency weakening to a fresh low.

Trump on Wednesday told reporters that talks are continuing “telephonically” between the two sides after an abortive effort to meet in Pakistan over the weekend.

Here’s more on the war:

• U.S. Federal Reserve Chair Jerome Powell warned the energy shock brought by the war “hasn’t even peaked yet,” saying at a press conference that “the conflict in the Middle East has added to” economic “uncertainty.”
• The U.S. is seeking forfeiture of two Iran-linked oil tankers seized by naval forces enforcing the blockade against the Islamic Republic, according to a senior White House official.
• Increasing numbers of so-called clean tankers that transport fuels like diesel and gasoline are becoming dirty crude carriers as the impact of the war in Iran makes switching more profitable.
• The U.S. military is weighing sending the Dark Eagle hypersonic missile to the Middle East for possible use against Iran, seeking a longer-range system to hit ballistic-missile launchers deep inside the country.
• Top Pentagon officials finally put a price tag on the war in Iran so far during a contentious congressional hearing on Wednesday. Analysts say the $25 billion figure they cited underestimates the total cost by a large amount.

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