US and Iranian negotiators in New York are discussing a phased path out of the war, which has lasted nearly seven months. The first stage would see Tehran reopen the Strait of Hormuz to shipping in exchange for Washington lifting its economic blockade on Iran, with the possibility of giving Tehran access to frozen assets, according to sources close to the talks.
Strait of Hormuz at centre of US-Iranian bargaining
The Strait of Hormuz has become the main bargaining chip in efforts to end the conflict between the two countries. Iran is seeking relief from the US blockade, which is placing severe pressure on its economy, while Washington wants guarantees of free passage for ships through the waterway, a key route for global oil supplies that sources say Tehran is currently closing.
But the talks face an obstacle over the sequence of steps, as neither side wants to be the first to give up the leverage that brought them back to diplomacy. Two Iranian sources, two regional officials and two Western diplomatic sources said that, despite its firm stance, Iran recognises the economic cost that could result from prolonging the confrontation.
Dispute over sequence of concessions holds up phased deal
A senior Iranian official said the most realistic way to break the deadlock was a phased agreement under which Iran would allow shipping through the Strait of Hormuz to resume in exchange for the United States ending its economic blockade, and perhaps giving Tehran access to its frozen assets.
On the sidelines of the UN General Assembly meetings, he said one possible path forward was to «resolve the crisis in stages, beginning with ending the blockade and reopening the Strait of Hormuz». This path would require US President Donald Trump to approve a new temporary arrangement, after a previous understanding collapsed last July.
The challenge facing the negotiators is not limited to drawing up the broad outlines of a deal. It also includes ensuring that any concessions made by the two sides last long enough to build confidence and prevent previous understandings from collapsing again. Trump has said he believes the United States and Iran can reach an agreement after the congressional midterm elections scheduled for 3 November.
Diverging positions put pressure on negotiations
A senior European official, by contrast, said the Iranians had «a very long list of demands», pointing to the scale of the issues still on the negotiating table. A White House official adopted a tougher position, saying Iran was «desperate to reach a deal», while «President Trump holds all the cards and will make the decision that is best for the United States».
He added that the US president remained «open to dialogue with Iran under the right circumstances», but did not need to negotiate, saying Washington was in a «very strong position» and that the Iranian economy was «collapsing».
The same official said that «crippling sanctions» and what he described as «one of the most successful blockade operations in history» had paralysed the Iranian economy and left Tehran completely bankrupt. He added that Trump was prepared to let what he called «the inevitable Iranian collapse» run its course, rather than allowing Tehran to manipulate it, in his words.
The official also attributed the strength of the US position to what he said was US control of the Strait of Hormuz. Dennis Ross, a former US negotiator, put the chance of reaching an agreement before the midterm elections at about 30 per cent.
But he said both sides had reasons that could make an agreement before the election more attractive than postponing it, and said the blockade was the factor actually putting pressure on the Iranians, adding: «It is choking them».
Elections could determine the deal’s appeal and political timing?
Trump could benefit politically from reaching a deal before the vote, because reopening the Strait of Hormuz could ease tensions, limit the rise in oil prices and help lower petrol prices in the United States, a politically sensitive issue for voters. At the same time, Iran’s chance of obtaining the economic relief it needs may be greater while Trump has a direct political incentive to conclude an agreement.
Ross believes the political constraints surrounding Trump’s decisions could ease after the midterm elections, potentially making him more willing to intensify pressure on Iran or even consider military options. The elections may therefore not themselves mark the end of the window for diplomacy, but they could be a decisive date for the political conditions that allow current efforts to continue.
The paradox is that the leverage that brought Washington and Tehran back to the negotiating table could also obstruct a settlement. The United States has economic tools that inflict major damage on Iran, while Tehran controls access to a vital corridor for energy exports. Neither side therefore wants to give up its main bargaining chip without receiving a tangible and simultaneous concession in return.
If the two sides cannot turn these bargaining chips into an agreement before the midterm elections, the window for a diplomatic solution could narrow and the risk of escalation could increase. The senior Iranian official said Tehran was preparing for the possibility of war breaking out again with Washington while also seeking a negotiated way out, and accused the United States of using the economic blockade and the threat of force as tools of coercion.
The Iranian official added: «Our fingers are on the trigger, and the Americans know what they have to do, but the chances of resolving the crisis through diplomacy are extremely slim because of their excessive demands». The statement reflects continued readiness for confrontation alongside the negotiating track, as both sides seek to improve the terms of any possible arrangement without making a unilateral concession.
Regional sources said Tehran had shown flexibility over its demand to impose fees on ships passing through the Strait of Hormuz, becoming willing to remove the demand from the main agreement and place it in a side annex. The flexibility is linked to the end of the US blockade becoming a more urgent priority for Iran, but it does not mean Tehran is prepared to give up control of the waterway.
In this context, Trump said Iran’s main priority was not the collection of fees from passing ships, but maintaining its administrative control over the strait. He added that Tehran might be prepared to postpone the issue of fees, but would not give up administrative control of the waterway, highlighting the difference between flexibility over a financial demand and insistence on the strait’s strategic position.
Alongside the talks, Washington is continuing to tighten pressure on the Iranian economy through new sanctions added to the blockade that has choked Iranian oil exports, a crucial source of foreign currency. During September, the United States targeted Iran’s remaining commercial airlines and their support networks as part of a campaign aimed at cutting off channels of economic support for the Iranian government and the Islamic Revolutionary Guard Corps.
Trump warned that the Iranian economy could «rot» if no agreement was reached. The continuation of sanctions alongside negotiations shows that Washington is seeking to extract concessions under pressure, while Tehran is demanding that the pressure be lifted before taking substantive steps. This is the dispute obstructing agreement on an acceptable timetable for implementing the commitments.
Gulf states are monitoring the talks from a different perspective. They want the dispute to end and the risk of escalation to ease, but do not want the region’s strategic waterways to become permanent bargaining chips. This places freedom of navigation and the stability of energy routes alongside the direct US and Iranian demands in calculations over any potential settlement.
Dani Citrinowicz, a regional analyst and former Israeli military intelligence officer, said the New York talks had not changed either side’s fundamental positions. He said Iran was unlikely to retreat as long as it believed Trump wanted to avoid a broader escalation before the midterm elections, an assessment that affects Tehran’s calculations over how much pressure it can withstand.
Alan Eyre, a former US negotiator on the Iran file, said the blockade was harming Tehran but was not necessarily pushing it to soften its position. He added that the pressure could instead drive the Iranians to escalate because they believed that easing their position meant their destruction, highlighting the risk that coercive tools could produce the opposite result.
A Western official familiar with the talks summed up the focus of the negotiations by saying: «The whole issue is about opening the Strait of Hormuz», adding that all the parties were facing domestic pressure and that the Iranians understood this. The main point of disagreement remains how to synchronise the restoration of shipping with the lifting of the blockade in a way that prevents either side from losing its leverage before securing the other side’s implementation of its commitments.
