By Michael Martina Reuters

Iran and the United States played down hopes for an imminent breakthrough in the three-month-old war on Monday, with U.S. Secretary of State Marco Rubio saying there will either be a good agreement or Washington would deal with the country in “another way.”

Rubio told reporters in New Delhi that the U.S. ‌would give diplomacy every chance to succeed before exploring “alternatives”, after President Donald Trump said on Sunday he had told his representatives not to rush into any Iran deal.

There was a “pretty ‌solid thing on the table in terms of their ability to open up the strait, get the strait open, enter into a very real, significant, time-limited negotiation on the nuclear matter, and hopefully we can pull it off,” Rubio said.

Iran’s foreign ​ministry spokesperson Esmaeil Baghaei said on Monday that Iran was negotiating an end to the war and was not currently discussing nuclear issues.

The spokesperson added that a framework had been reached but no one could say an agreement between the United States and Iran was imminent. The potential memorandum of understanding contained no specific details about the management of the Strait of Hormuz, which belongs to the coastal countries, he said.

A day earlier, Trump wrote on Truth Social that the U.S. blockade on Iranian ships in the Strait of Hormuz would “remain in full force and effect until an agreement is reached, certified, and signed”.

He added, “Both sides must take their ‌time and get it right.”

Oil prices fell 5% to two-week lows on ⁠Monday, as optimism grew that the U.S. and Iran were moving closer to a peace deal.

STICKING POINTS

Trump raised expectations of an imminent deal on Saturday when he said Washington and Tehran had “largely negotiated” a memorandum of understanding on a peace agreement that would reopen the Strait of Hormuz.

Iran’s foreign ministry spokesperson said on ⁠Monday that Iran would not take tolls for passage through the vital waterway, but added that it was “normal for services provided to require a price”.

Before the conflict, the strait had carried a fifth of global shipments of oil and liquefied natural gas.

The two sides remain at odds on several difficult issues, such as Iran’s nuclear ambitions, Israel’s war in Lebanon with the Iranian-backed Hezbollah militia and Tehran’s demands for the lifting of sanctions and the release ​of ​tens of billions of dollars of Iranian oil revenues frozen in foreign banks.

A senior Trump administration official outlined what ​he said were the latest contours of issues being negotiated.

Speaking on the condition ‌of anonymity, the official said Iran had agreed “in principle” to open the Strait of Hormuz, in exchange for the United States lifting its naval blockade, and to dispose of Tehran’s highly enriched uranium.

The U.S. understood Iran’s Supreme Leader Ayatollah Mojtaba Khamenei had endorsed the broad template of the deal, he added.

The official pushed back on suggestions that Iran had not accepted disposing of its stockpiled enriched uranium. “It’s a question about how,” the official said.

A second senior administration official said on Sunday the proposed framework would give negotiators 60 days to reach a final deal.

Iranian sources had told Reuters that in future stages, “feasible formulas” could be found to resolve the dispute over its highly enriched uranium stockpile, including diluting the material under the supervision of the U.N. nuclear watchdog.

TENUOUS CEASEFIRE

Iran has long denied U.S. and Israeli accusations that it ‌is pursuing nuclear weapons and says it has a right to enrich uranium for civilian purposes, although the purity ​it has achieved far exceeds that needed for power generation.

Trump, whose approval ratings have been hit by the war’s impact ​on U.S. energy prices, and who has faced congressional efforts to curb his war powers, has ​repeatedly played up the prospect of a deal to end the conflict started by the U.S. and Israel on February 28.

A tenuous ceasefire has held since ‌early April.

The president hit back at critics of his handling of the negotiations ​and his willingness to compromise with Iran.

“If I make ​a deal with Iran, it will be a good and proper one … So don’t listen to the losers, who are critical about something they know nothing about,” Trump posted on Sunday.

Any deal reinforcing the current fragile ceasefire would bring relief to markets but not immediately defuse a global energy crisis, which has driven up costs of fuel, fertiliser and food.

The U.S.-Israeli bombing of Iran ​killed thousands of people in Iran before it was suspended in early ‌April.

Israel has also killed thousands more and driven hundreds of thousands from their homes in Lebanon, which it invaded in pursuit of militant group Hezbollah. Iranian strikes on ​Israel and neighbouring Gulf states have killed dozens.