Zürcher Nachrichten - No end to war in sight as Iran and US reject talks terms

The sharp exchange of messages raised the spectre of a return to open conflict in the Gulf, sent oil prices soaring and dashed hopes that a deal could be quickly negotiated to reopen the Strait of Hormuz to commercial shipping.

Trump reacted with fury after Iran responded to the latest US proposal for peace talks with a counteroffer he deemed, in a brief social media post, "TOTALLY UNACCEPTABLE".

The exchange unnerved global energy markets, with crude prices rising by more than four percent before dropping back slightly in afternoon London trading and a top executive warning the crisis could last for years.

"The energy supply shock that began in the first quarter is the largest the world has ever experienced," the CEO and president of Saudi oil giant Aramco, Amin Nasser, told investors.

"If the Strait of Hormuz opens today, it will still take months for the market to rebalance, and if its opening is delayed by a few more weeks, then normalisation will last into 2027," he said.

- Hunger and starvation -

Aside from energy -- in peacetime a fifth of the world's oil and LNG exports pass through Hormuz -- the world also faces a shortage of fertiliser, much of which comes from Gulf ports, and hence food for tens of millions of people.

"We have a few weeks ahead of us to prevent what will likely be a massive humanitarian crisis," Jorge Moreira da Silva, executive director of the United Nations Office for Project Services (UNOPS), told AFP.

"We may witness a crisis that will force 45 million more people into hunger and starvation."

Trump did not say what had offended him in Iran's response, but Tehran's foreign ministry said it had called for an end to the US naval blockade and to the war "across the region" -- implying a halt to Israel's strikes targeting Hezbollah in Lebanon.

Crucially, ministry spokesman Esmaeil Baqaei told reporters, Iran demanded the "release of assets belonging to the Iranian people, which have for years been unjustly trapped in foreign banks".

This would be not just a return to the status quo before the United States and Israel launched the war on February 28 but a victory for the Islamic government's long-standing campaign against its economic isolation.

"We did not demand any concessions. The only thing we demanded was Iran's legitimate rights," Baqaei said.

An end to international sanctions would also diminish Washington's leverage over Tehran as it tries to secure a lasting end to Iran's nuclear enrichment.

The US, Israel and their allies have long accused Iran of seeking an atomic bomb, an accusation Tehran has repeatedly denied.

- 'It's not over' -

Israeli Prime Minister Benjamin Netanyahu insisted the conflict would not end until Iran's nuclear facilities are destroyed.

"It's not over, because there's still nuclear material -- enriched uranium -- that has to be taken out of Iran," he told US broadcaster CBS's 60 Minutes.

"There's still enrichment sites that have to be dismantled," he said.

The Wall Street Journal, citing people familiar with the matter, said Iran's counter-proposal had included the possibility of diluting some of its highly enriched uranium, with the rest transferred to a third country.

Iran had sought guarantees that the transferred uranium would be returned if negotiations failed or Washington abandoned the agreement, sources told the Journal.

Trump is expected to press China's President Xi Jinping -- a major buyer of Iranian oil -- on the Iran issue when he visits Beijing on Thursday, according to a senior US official.

- 'Restraint over' -

The lack of a path to a resolution has focused concern on the Strait of Hormuz, where Iran is restricting maritime traffic and setting up a payment mechanism to charge tolls for crossing ships.

US officials have stressed it would be "unacceptable" for Tehran to control the international waterway.

The US Navy is also blockading Iran's ports, at times firing on ship to disable them or boarding and diverting them.

In a social media post on Sunday, the spokesman for the Iranian parliament's national security commission warned Washington: "Our restraint is over as of today."

"Any attack on our vessels will trigger a strong and decisive Iranian response against American ships and bases," Ebrahim Rezaei said.

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W.Odermatt--NZN