Al Araby Al Jadeed is reporting that Qatar and Pakistan have put a “compromise proposal” in front of Washington and Tehran that meets the demands of both sides. The key detail is that the plan, presented to Iranian officials today by Pakistan’s army chief, reportedly already has American sign-off and some prior Iranian approval.
The reported terms:
- Release of $6 billion in interest on Iranian funds frozen in Qatari banks
- A “partial response” to Iran’s demand for the return of frozen funds
- A secret IAEA visit to Iranian nuclear sites, meeting a US demand
- A framework to stop a return to escalation and restart negotiations
The same outlet cites a source saying a breakthrough to halt escalation between Washington and Tehran is expected to be announced this week. Mediators are still working to narrow the remaining points of contention.
The market reaction is modest with crude is down about $1 per barrel since the headlines hit a half-hour ago. Naturally, traders are reluctant to trade on any Iran headlines, particularly coming from a questionable source.
Still, the structure is creative. Paying out interest rather than principal lets both sides claim a win. Tehran gets cash, and Washington can say the core funds stay frozen. A quiet IAEA visit is the kind of face-saving inspection that has to happen before anything bigger can, though the immediate leaking of a ‘secret’ visit isn’t going to build trust. If Pakistan’s army chief is personally carrying the paper, it’s being taken seriously at a high level.
For oil, a real de-escalation removes some of the risk premium tied to Hormuz and the region. Watch for official statements from Washington, Tehran or Doha but it’s going to be a slow-moving process in any event. Obvsiously WTI above $100 and brent above $110 are reasons for the US to seek a deal ahead of the Nov 3 midterms.
This article was written by Adam Button at investinglive.com.