U.S.-Iran peace talks have effectively stalled, a former U.S. ambassador told CNBC on Tuesday, with Washington pursuing a diplomatic solution that was never "seriously on the table."
The 60-day window for a negotiated settlement closed without a breakthrough on Monday, with ships still unable to safely transit the Strait of Hormuz.
U.S. President Donald Trump on Monday threatened to bomb Oman — an ally of Washington — if it "gets in the way" of negotiations with Iran. Tehran is in active talks with Oman over a deal to reopen the Strait of Hormuz, a critical route for international shipping that has become a key sticking point in negotiations with U.S. representatives.
Speaking to CNBC's Access Middle East on Tuesday, Marc Sievers, who served as U.S. ambassador to Oman between 2016 and 2019, said Trump's threat to bomb the country was an attempt to try "to get their attention more than a practical threat" — but he added that it appears Oman has "lost the support of the United States."
"It's very hard for me to imagine [U.S. Central Command] planning bombing raids on Omani targets when we've worked very closely with the Omanis and developed their ports and so forth for access for the U.S. Navy over a number of years, but clearly there is frustration in the White House that Oman seems to be partnering closely with the Iranians on developing a channel for the Strait of Hormuz," Sievers said.
"I don't really know what the substance is at the moment, but I think it appears that the U.S. side wants the Omanis to leave it alone and let the U.S. take the lead in opening the strait," he added.
Ship attacked in Hormuz Strait
A cargo vessel was struck by a projectile while transiting the Strait of Hormuz, the U.K. Maritime Trade Operations agency said Tuesday, signaling persisting navigation risks in the waterway as Washington and Tehran harden their positions.
The attack caused damage to the engine room and resulted in a crew casualty, the maritime agency said, adding that the remaining crew were being assisted by the Omani Coast Guard.
The incident came after an Iranian military official repeated threats that the Islamic state won't back down over the Strait of Hormuz. Fox News reported Tuesday that Ebrahim Zolfaghari, Iranian military spokesperson, said vessels attempting passage through the strait will "find several beautiful holes in their hulls."
Asked whether diplomacy has stalled as the 60-day window for a negotiated settlement between the U.S. and Iran closed without a breakthrough, Sievers said it was "a fair characterization."
"For over a week now, the president's been emphasizing the economic pressure that we're putting on the Iranians … of course, they see the strait as their leverage over the president," he said, noting that Iran was also threatening military escalation.
"They have not gone down that path yet. I think that is a possibility, but we will have to wait and see. I don't think it'll go well for them. I think they bluster more than they have capability, but there certainly is some damage that they could do," he said.
While he said he was reluctant to criticize the Trump administration's handling of the conflict, Sievers told CNBC he felt it had been "dragged out, perhaps unnecessarily, in search of a diplomatic solution that I don't think was ever really seriously on the table."
"Both sides will dig in for a longer standoff," a team of analysts at Eurasia Group said in a note Monday, as neither side sees an urgent need to make concessions.
Ceasefire expires
Earlier on Monday, U.S. President Donald Trump ruled out extending the ceasefire, saying that Tehran won't accept the terms he considers necessary to end their war. "They're not going to make the kind of deal that I feel is necessary," Trump said in the Oval Office.
Iran's hardline leadership, for its part, has no intention of winding down the conflict, but instead widening the war to raise the costs for the U.S. and its regional allies, Wall Street Journal reported on Sunday, citing intelligence obtained from unnamed Iranian and Arab officials.
Eurasia Group no longer expects a peace deal by September, pushing back its timeline for de-escalation to year-end as the standoff drags on. The most likely outcome is "a limited deal" that allows Hormuz traffic to partially recover, the risk consultancy said, adding that pressure on Washington to push for an imminent reopening of the strait has eased.
Success in routing oil around the Strait of Hormuz has kept prices from spiking past $100 a barrel, while the global economy has adapted to the closure, giving the U.S. room to "afford to wait," Eurasia Group said.
The Strait of Hormuz, which handled about a fifth of the world's crude oil and gas before the war, has become the central flashpoint between the U.S. and Iran since February. Shipping remains near a standstill amid sporadic attacks on oil tankers. Just three vessels transited the Strait of Hormuz on Sunday, according to ship-tracking data from Kpler.
The Bab el-Mandeb strait, where Yemen Houthis declared a naval blockade on Saudi Arabia in mid-July, also saw just 49 weekend transits by commodity vessels, according to Reuters, down from 55 in the prior week.
Iranian Foreign Minister Abbas Araghchi said in a Telegram post on Saturday that Iran's negotiations with Oman remained ongoing to determine a new maritime route in the Strait of Hormuz, while Trump on Monday threatened to bomb Oman if the Gulf state "gets in the way" of U.S. efforts to reopen the strait.
"Any recovery in Hormuz flows will be partial," said analysts at Eurasia, as the U.S. and Iran remain in a state of simmering hostilities, with heightened risks of renewed flare-up that disrupts traffic.
Oil prices climbed on Tuesday, with U.S. crude oil futures rising 0.6% to $85.02 a barrel, after a 2.6% rise on Monday.
Brent crude, the international benchmark, was 0.2% higher on Tuesday after rising above $90 on Monday, last trading at $91.12 a barrel.
